Oil prices rebound as OPEC agrees extra meet

Oil.

Oil barrels

08 August 2016, Lagos – World oil prices rebounded Monday, with support coming from an announcement by OPEC that the producers’ cartel plans an informal meeting next month which may result in lower output.

Around 1600 GMT, Brent North Sea crude for delivery in October was up $1.12 at $45.39 a barrel compared with the close on Friday. US benchmark West Texas Intermediate for September delivery rallied $1.24 to $43.04 a barrel.

“Oil prices are climbing on rumours that global producers are mulling over… an oil output freeze deal,” wrote analysts at oil broker PVM.

OPEC on Monday announced an informal meeting of member countries in Algeria set for September, ahead of a planned meeting due at the end of November.

The Organization of the Petroleum Exporting Countries said in a statement that the meeting would take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28.

Vienna-based OPEC last month said it expected the global supply glut to ease further this year and next thanks to reductions in oil output from producers outside the cartel, particularly the United States.

If accurate, this would be a vindication of its Saudi-led strategy since 2014 of squeezing non-OPEC suppliers by keeping production at high levels despite low prices. “There is no backing off by OPEC,” SEB Markets analyst Bjarne Schieldrop said Monday.

“They will continue to defend market share or rather they will produce more or less what they can.”

Prices have been fluctuating since entering a “bear” market last week, falling more than 20 percent and closing below $40 a barrel for the first time since April.

Initially recovering as US commercial crude inventory data showed an unexpected draw in gasoline, prices tumbled again later in the week after robust hiring numbers from the US government pushed the dollar higher.

A stronger greenback typically makes dollar-priced oil more expensive for consumers using other currencies, denting demand.

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