Oil is heading for its biggest weekly advance since April after Saudi Arabia signaled it’s prepared to discuss stabilizing markets at informal OPEC talks next month after prices tumbled into a bear market.
Futures were little changed in New York, on track for a weekly increase of 3.9 percent after surging on Thursday. Discussions with members of the Organization of Petroleum Exporting Countries and non-OPEC producers may result in action to stabilize the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said in a statement, according to media reports including Reuters. Global markets will continue to rebalance this year, said the International Energy Agency.
Oil has fluctuated after falling more than 20 percent into a bear market and closing below $40 a barrel last week. Refiners around the world will process record volumes of crude this quarter, shrinking brimming crude supplies, the IEA said in its monthly report on Thursday. Saudi Arabia raised production to a record last month, according to data the country submitted to OPEC.
“Talks about supply cuts from the oil cartel’s members have resurfaced,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich. “We see the chances of any action as exceptionally slim. The talks rather taste like a creative way to prop up prices.”
West Texas Intermediate for September delivery was at $43.42 at 12:05 p.m. London time, having earlier risen as much as 68 cents to $44.17 a barrel on the New York Mercantile Exchange. The contract gained $1.78 to $43.49 on Thursday, rebounding after a 3.1 percent drop during the previous two sessions. Total volume traded was about 27 percent above the 100-day average.

Stabilize Markets

Brent for October settlement was 14 cents lower at $45.90 a barrel on the London-based ICE Futures Europe exchange after rising as much as 1.4 percent earlier. The contract gained 4.5 percent to $46.04 a barrel on Thursday. Prices are up 3.8 percent this week. The global benchmark crude traded at a premium of $1.74 to WTI for October.
While the market is on the path to rebalancing, reducing the inventory overhang of crude and products will take time, Al-Falih said in the statement. OPEC will hold informal talks at the International Energy Forum in Algiers, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said in a statement on Monday.

Oil-market news:
  • An OPEC agreement in Algiers is unlikely, said Commerzbank AG and Petromatrix GmbH.
  • A higher oil price is needed to stabilize the market, Venezuelan President Nicolas Maduro said on state television.
  • Rosneft PJSC’s oil output grew in the second quarter amid a drilling surge, potentially marking a pivotal return to growth as Russia’s largest producer weathers the slump in crude prices.
  • China’s oil production dropped 8.1 percent to 16.7 million metric tons last month from a year ago, according to data from the National Bureau of Statistics on Friday. That’s about 3.95 million barrels a day, sliding more than 2 percent from June.
  • China’s oil product demand plunged to the weakest in almost two years as industrial activity weakened in the world’s second-largest economy.