17 September 2014, News Wires – Brent crude steadied below $99 per barrel on Wednesday, after staging its steepest climb in two weeks in the previous session, on hopes Opec will cut output and reduce a global supply glut.
The European benchmark sank to a 26-month low this week on continued worries about rising supplies and slower demand growth in China and Europe, but prices rose on Tuesday after OPEC’s secretary general Abdullah al-Badri said the group could trim its 2015 output target by 500,000 barrels per day.
US crude, or the West Texas Intermediate (WTI), was also down $0.13 to $94.75 after rising 2.1% on Tuesday.
“Thanks to the comments from Opec, WTI and Brent went up sharply but at the moment, there is still a lot of supply,” Newedge Japan commodity sales manager Ken Hasegawa told Reuters.
Oil prices on both sides of the Atlantic have dropped over the past two months, dragged down by soaring US shale oil production that has replaced many imports from West Africa, Europe and other regions, leading to a supply glut in the Atlantic Basin and Asia.
Brent has stayed below Opec’s preferred level of $100 for more than a week, prompting talk of a cut in Opec output.
Any production cut by Opec, which is due to meet in late-November, would be the group’s first since 2008.
Lower crude output from Libya also underpinned oil prices. The National Oil Corp said on Tuesday that output at its El-Sharara oil field has been reduced after rockets landed close to the nearby 120,000 bpd Zawiya refinery.
Despite the overnight price gains, oil investors remained concerned about the global economic outlook, the strength of the US dollar and the outcome of an independence vote in Scotland that could rock financial markets.
“Still, the market has not stabilised and is waiting for Fed and Scotland’s decisions,” Hasegawa said. “Another reason is the increase in crude stocks from the API data.”
Data from the American Petroleum Institute on Tuesday showed a surprise build of 3.3 million barrels in US 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 Tuesday morning.
Investors are now eyeing the US central bank’s policy meeting that ends on Wednesday for any hints on when the Fed could raise interest rates.
Despite earlier expectations of a more hawkish stance, flat US producer prices in August, which points to muted inflated pressures, could allow the Fed to bide its time as it considers when to raise interest rates.