Oil rose about 1 percent, hitting four-month highs on Thursday, underpinned by news of another informal OPEC meeting on output cuts and surprise drop in US crude stocks, though trading was choppy after a price gain of 15 percent in seven sessions.
Saudi, Iranian and Iraqi energy ministers will be among key OPEC representatives to meet non-OPEC member Russia on the sidelines of an energy conference next week in Istanbul, OPEC sources said.
Oil has gained more than $6 a barrel since the Organization of the Petroleum Exporting Countries announced at informal talks in Algeria on Sept. 28 that it hopes to reduce output to 32.5 million-33 million barrels per day. That would remove about 700,000 bpd from a global glut estimated by analysts at 1.0 million-1.5 million bpd.
Brent crude was up 54 cents, or 1 percent, at $52.40 a barrel by 11:46 a.m. EDT (1546 GMT), rising earlier to $52.65, its highest since June 9. It settled at below $46 prior to the OPEC announcement.
US West Texas Intermediate (WTI) crude rose 48 cents to $50.31, having broken above $50 for the first time since June 24. WTI settled below $45 seven sessions ago.
Earlier in the session, the market pared gains after traders cited energy monitoring service Genscape’s report of a build of nearly 1 million barrels in stockpiles at the Cushing, Oklahoma delivery base for U.S. crude futures during the week to Oct 4.
Technically, both benchmarks have risen too much too soon, with Brent’s Relative Strength Index at 69 and WTI’s at 65 — just below the overbought level of 70.
“It’s really crazy these markets,” said Carsten Fritsch, commodities strategist for Commerzbank in Frankfurt. “Prices rise, regardless of the news flow and any dip is being seen as buying opportunity.”
Oil crashed from above $100 a barrel in mid-2014 to around $26 in February this year from oversupply of up to 2 million bpd and OPEC’s refusal then to cut output.
But with the group changing its stance, and U.S. crude stocks down by a surprise 26 million barrels the past five weeks, prices have been on a roll.
No decision will be taken at OPEC’s talks in Istanbul, but there will be discussion on steps needed before the group’s policy meeting in Vienna, where output cuts will be finalized, officials said.
Algeria’s Energy Minister Nouredine Bouterfa told local media the Vienna meeting could reduce output by another 1 percent above the 700,000 bpd agreed in Algeria.
“We expect that Saudi will shoulder the bulk of the production cuts with a reduction of 5 percent or 0.5 million bpd, with other Gulf States cutting by 0.3 million bpd,” Bernstein Energy said in a note, adding that Iran, Libya and Nigeria were likely to get a “pass.”