LONDON: Brent crude oil consolidated around $99 per barrel on Wednesday, recovering from a sharp sell-off, on hopes the Organization of the Petroleum Exporting Countries (OPEC) would help reduce a global supply glut by cutting output.
The benchmark sank to a 26-month low this week on rising supplies and signs of slower demand growth in China and Europe, but prices rallied after OPEC Secretary General Abdullah al-Badri said the group could trim its 2015 output target by 500,000 barrels per day (bpd).
Many OPEC countries need oil prices above $100 a barrel in order to meet their budget needs and analysts say Saudi Arabia, OPEC's biggest producer, could cut production in an effort to support prices. Any production cut by OPEC, due to meet in November, would be the group's first since 2008.
"It makes sense for Saudi Arabia to curb supply," Michael Poulsen, oil analyst for A/S Global Risk Management, said. "We're a bit in no man's land at the moment ... until we enter the season for higher demand for distillates and heating oil."
Brent was down 25 cents to $98.80 a barrel by 0755 GMT, after closing up $2.40 in the previous session - the biggest daily gain since Sept. 3. U.S. crude was down 25 cents to $94.63 after rising 2.1 percent on Tuesday.
Brent hit a high above $115 a barrel in June on concerns an Islamist insurgency in Iraq could hit oil output in OPEC's second biggest producer. But Iraqi oil exports have been steady and exports from Libya have risen sharply in recent weeks.
Rising U.S. oil production, mostly from shale, has also more than compensated for any lost output, creating a huge surplus in the Atlantic Basin and Asia.
Conflict in oil producing regions remains a worry.
Libya's National Oil Corp said on Tuesday output at its El-Sharara oil field had been reduced after rockets landed close to the nearby 120,000 bpd Zawiya refinery.
Traders kept an eye on Nigeria, where oil workers said they had started a strike that could affect exports.
Oil investors are concerned about the global economic outlook, the strength of the U.S. dollar and the outcome of an independence vote in Scotland that could rock financial markets.
Data from the American Petroleum Institute on Tuesday showed a surprise build of 3.3 million barrels in U.S. crude stocks last week, compared with analysts' expectations of a 1.6 million barrel draw.
The Energy Information Administration will release official inventory data at 1430 GMT.
Comments
Comments are closed for this article.