NEW YORK (Reuters) - Oil rose more than 1 percent to four-month highs on Thursday, spurred by another informal OPEC meeting on output cuts and plunging U.S. crude inventories, with some saying the market has overshot itself with a near 15-percent gain 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.
On top of OPEC’s pledged output cuts, prices were supported by the surprise drop in U.S. crude stocks for a fifth week in a row, bringing the total drawdown since the beginning of September to 26 million barrels, according to government data on Wednesday. [EIA/S]
Brent crude LCOc1 settled up 65 cents, or 1.3 percent, at $52.51 a barrel. It rose earlier to $52.65, its highest since June 9.
U.S. West Texas Intermediate crude CLc1 closed up 61 cents, or 1.2 percent, at $50.44. It was WTI’s first settlement above $50 since June 24.
The Relative Strength Index for both benchmarks were at 69 -- just below the 70 level for a technically overbought market.
Earlier on Thursday, prices pared gains briefly after energy monitoring service Genscape reported a build of nearly 1 million barrels in stockpiles at the Cushing, Oklahoma delivery base for WTI during the week to Oct 4.
“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.
OPEC’s policy meeting in Vienna on Nov. 30 will decide how the group’s members would contribute to the pledged cuts.
Algeria’s Energy Minister Nouredine Bouterfa told local media OPEC could ultimately 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”.
Additional reporting by Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and Alexandra Hudson