Oil Rises After OPEC Signals Supply Cut

West Texas Intermediate and Brent crudes climbed after OPEC’s Secretary General said the group may cut output targets next year.

Abdalla El-Badri said today that the Organization of Petroleum Exporting Countries’ production quota could fall 500,000 barrels a day to 29.5 million barrels a day next year. El-Badri was speaking at OPEC’s secretariat in Vienna after talks with Russian Energy Minister Alexander Novak today. WTI has tumbled 13 percent since touching $107.73 a barrel on June 20 as Asian and European economies have showed signs of slowing while crude output gained.

“After the significant decline in prices, investors were looking for a reason to get into the market and El-Badri’s comments gave them that,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “El-Badri said this was an outlook not a decision, but the market is still taking it as a positive sign.”

WTI for October delivery rose 73 cents, or 0.8 percent, to $93.65 a barrel at 10:39 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 11 percent above the 100-day average for the time of day. Prices have decreased 4.8 percent this year.

Brent for November settlement increased 93 cents, or 1 percent, to $98.81 a barrel on the London-based ICE Futures Europe exchange. Volumes were 6.1 percent lower than the 100-day average. The October contract expired yesterday, falling 46 cents to $96.65 a barrel.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza