Oil hits four-month highs as OPEC keeps talks of cuts in focus

Thu Oct 6, 2016 5:25pm EDT
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By Barani Krishnan

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.   Continued...

Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, September 30, 2016. REUTERS/Essam Al-Sudani