Oil up second straight month on OPEC-fueled rally

Fri Sep 30, 2016 4:22pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices settled mixed on Friday while posting their second straight monthly gain on OPEC's planned output cuts, even as skepticism about the cartel's pledge grew after data suggested another record high in its production.

Brent crude settled up 4 percent for September and U.S. West Texas Intermediate (WTI) crude rose 8 percent, helped by Wednesday's announcement by the Organization of the Petroleum Exporting Countries in Algeria that it aimed to remove some 700,000 barrels per day (bpd) from the market.

Analysts estimate the global oversupply in crude at 1.0-1.5 million bpd.

A Reuters survey on Friday found that OPEC output likely rose to 33.60 million barrels per day in September from a revised August record of 33.53 million bpd as Iraq boosted crude exports and Libya reopened some of its main oil terminals.

Brent for November delivery LCOX6 settled down 18 cents, or 0.4 percent, at $49.06 a barrel, before expiring as the front-month contract. For both the week and month, it rose about 4 percent. For the quarter it fell around 1 percent.

WTI's front-month, also November CLc1, closed up 41 cents, or nearly 1 percent, at $48.24 per barrel. It gained 8 percent on the week and month, and was almost flat on the quarter.

"Yes, it's a second straight monthly gain for oil but the question is whether we can continue punching higher from here," said David Thompson, executive vice-president at Powerhouse, a commodity-focused broker in Chicago.

"If we look at OPEC's latest production figure, it gives them an even larger amount to cut. None of the actors involved are flushed with cash. They're all petro states suffering from low oil prices. It's very difficult to see them cut production in a meaningful way when they need the money."   Continued...

A Texaco service station displays the price of petrol and diesel close to the financial centre of London January 30, 2016. The global oil price is hovering at about $30 U.S. dollars a barrel.  REUTERS/Paul Hackett