Oil Rises as Output Freeze Hope Gains Momentum

Oil rose further above $45 a barrel on Tuesday as forecasts for a drop in U.S. inventories and speculation of producer action to prop up prices countered concern about a supply glut.

U.S. crude inventories were expected to have fallen by 1 million barrels in weekly reports, although market intelligence firm Genscape reported a rise of more than 307,000 barrels at the Cushing, Oklahoma delivery hub for U.S. oil, traders said.

Brent crude for October LCOc1 was up 7 cents at $45.46 a barrel by 1341 GMT (0941 ET), after rising $1.12 on Monday. The global benchmark fell nearly 15 percent in July. U.S. crude for September CLc1 was up 19 cents at $43.21.

“One can only wonder how long this enthusiasm will last considering the oversupplied fundamental backdrop,” said Tamas Varga of oil broker PVM. “Current oil price strength does not feel justified.”

OPEC comments helped fuel the gain on Monday. Its president Qatar, in a rare statement issued by the group’s Vienna headquarters, said the market was on the path to rebalancing and a drop in prices would be temporary.

OPEC sources have been saying since June that renewed talks about a global output freeze could take place in September, when most members, plus non-members such as Russia, are expected to attend an International Energy Forum meeting in Algeria.

via Reuters

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