Oil up nearly 3 percent on OPEC output speculation as glut grows

Mon Aug 8, 2016 4:00pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices settled up nearly 3 percent on Monday amid renewed speculation that OPEC would try to restrain output, easing oversupply worries that pressured the market to three-month lows last week.

The Wall Street Journal reported last week that OPEC countries such as Venezuela, Ecuador and Kuwait want to take another stab at cooperation between the 14-nation Organization of the Petroleum Exporting Countries and non-members such as Russia.

The last such initiative failed in April after Saudi Arabia backed out of talks in Doha, Qatar, citing Iran's refusal to join in a so-called production freeze.

Qatar's Energy Minister and OPEC President Mohammad bin Saleh al-Sada hinted at overtures of cooperation in a statement on Monday. OPEC members are to have an informal meeting on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28.

The energy minister of Russia, the world's biggest oil producer, said crude prices were not at levels that warranted intervention, but he remained open to negotiations with OPEC.

"It would appear that OPEC calls for restraint would be inevitable," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates, citing concerns over rising numbers of U.S. oil rigs and weakening energy demand.

The U.S. oil rig count rose last week for a sixth week in a row. In China, fuel exports increased more than 50 percent from a year earlier to a monthly record 4.57 million tonnes, adding to a global glut.

U.S. West Texas Intermediate (WTI) crude settled up $1.22, or 2.9 percent, at $43.02 per barrel. WTI hit April lows beneath $40 a barrel last week.   Continued...

A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq December 21, 2015.  REUTERS/Essam Al-Sudani