Brent crude up almost 3 per cent on reported Saudi cut

Brent crude up almost 3 per cent on reported Saudi cut
Barani Krishnan
NEW YORK — Reuters
Published Thursday, Oct. 23 2014, 4:08 PM EDT
Last updated Thursday, Oct. 23 2014, 4:09 PM EDT
Brent crude oil jumped nearly 3 per cent on Thursday, its most in over four months, after an industry source said Saudi Arabia cut output in September following the summer’s tumble in prices.
Strong euro zone economic data, better-than-expected Chinese manufacturing numbers and a rally in Wall Street stocks also boosted oil prices, traders said.
Brent’s front-month contract for December delivery settled up $2.12, or 2.5 per cent, at $86.83 (U.S.) barrel. It was the largest percentage gain in a day for Brent since June 12, and came after a session peak of $87.19.
U.S. crude’s front-month finished up $1.57, or 2 per cent, at $81.86, after an intraday high at $82.37. That was the biggest percentage rise since Sept. 16.
Both Brent and U.S. crude have lost at least a fifth of their value from June highs due to fears of oversupply.
Some analysts remained skeptical of Thursday’s price recovery, saying any rebound between now and next month’s meeting of the Organization of Petroleum Exporting Countries (OPEC) was likely to be short-lived.
“I’m not impressed,” said Walter Zimmerman, chief technical analyst at United-ICAP in Jersey City, New Jersey. “Considering how far Brent has fallen, from more than $115 to around $82, the nature of this rebound is more of a dead-cat bounce than a dramatic illustration that we have hit some kind of meaningful bottom.”
The 12-member OPEC meets on Nov. 27 to consider adjusting its output target of 30 million barrels per day for the first half of 2015 and so far only a minority of members have called for an output cut.
Prices rallied on Thursday after an industry source said the amount of crude supplied by Saudi Arabia to domestic and export markets last month fell to 9.36-million barrels from around 9.69-million barrels in August.
“A story like that would certainly move the market no matter who said it, because the Saudis themselves told OPEC they had raised production,” said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
Saudi Arabia, the world’s largest oil producer, told OPEC’s September world oil supply report that it pumped 9.7 million barrels per day (bpd), up from around 9.6 million bpd in August. Barrels not supplied to the markets are put into storage.
“The question in every trader’s mind is what is OPEC going to do at its November meeting, and all that uncertainty has made the market go yoyo the past few days,” Williams said.
Saudi Arabia has previously sent signals it is comfortable with markedly lower oil prices and willing to maintain high supply levels to compete for market share.
Crude inventories in the United States, the No. 1 oil importer, meanwhile, surged by 7.1 million barrels last week to 377.68 million barrels, more than double what analysts had forecast.

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on October 24, 2014, in oil. Bookmark the permalink. Leave a comment.

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