Oil Rallies On Upbeat OPEC Demand Growth Outlook

In the long-term, there was a risk that lower levels of oil production in countries outside of OPEC and the US could result in an increase in oil prices, van Beurden said.

Brent crude, the global crude benchmark, rose 5 cents to $49.30 a barrel at 0155 EDT.

Crude oil prices jumped 4% on Tuesday after the US cut output forecasts.

Oil prices are also being given a continued boost from the USA jobless numbers on Friday that pushed back expectations for a rate rise by the Federal Reserve to next year, amid a dearth of data early this week, said Avtar Sandu, senior commodities manager at Phillip Futures in Singapore.

Oil prices rose on Wednesday after data showed the market was beginning to tighten, with falling supply, higher demand and lower inventories after two years of heavy surplus.

“There is one problem we are facing: the overhang”, he said, adding there were already signs of higher crude demand and of a drop in supply growth from non-OPEC members.

November West Texas Intermediate crude CLX5, +0.70% climbed $2.27, to settle at $48.53 a barrel on the New York Mercantile Exchange. The European benchmark crude was at a premium of $3.68 to WTI. The energy sector in the S&P 500 rose 2 percent, almost twice the gain of the broader market, The Associated Press reported. “Oil prices at current levels look ever less sustainable absent a collapse in the global economy”. A follow-up meeting was proposed, however, and any forthcoming discussions could signal that OPEC is ready to discuss a change in strategy or closer cooperation with Russian Federation – a country seen as a possible addition to the powerful, so-called “cartel”.

“Monday’s rally had been supported by a rise in United States gasoline and comments made by Russian Federation that it was prepared to meet OPEC and non-OPEC oil producers to discuss the market”.

“The world may find itself in a tight corner at a few stage, when stocks are rebalanced, growth of U.S. shale oil is stalled, oil production outside OPEC and the USA is starting to decline due to cuts to capital expenditure, and when – by that time – there is unlikely to be any significant spare capacity in the system” he told the London conference. A report showing a fifth weekly fall in the US oil rig count also underpinned crude prices, although trading was thin with China away on holiday.