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Oil prices rise as OPEC pledges decision on supply

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10/10/2019 | 04:35pm EDT
Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang

NEW YORK (Reuters) - Oil prices rose on Thursday, buoyed by comments by the head of OPEC that the organization could take action to balance oil markets and will decide in December on supply for next year.

Secretary-General Mohammad Barkindo did not specify whether the Organization of the Petroleum Exporting Countries would extend a pact to rein in production to stabilize prices, but the comments appeared to inspire hope in the market.

"Barkindo was sending a signal that OPEC was serious about supporting prices," said Phil Flynn, an analyst at Price Futures Group. "Between this and a possible China trade deal, the momentum has shifted."

Global benchmark Brent crude futures settled up 78 cents or 1.3% at $59.10 a barrel. In post-settlement trade, Brent extended gains to rise $1 on the day to $59.32 a barrel. U.S. West Texas Intermediate (WTI) futures were up 96 cents, or 1.8%, at $53.55 a barrel.

A December meeting between OPEC plus allies including Russia would take "decisions that will set us on the path of heightened and sustained stability for 2020," Barkindo said.

"Barkindo's comment reminds markets that if oil prices do not fall off a cliff over demand concerns, we could ... see OPEC+ extend their production cuts throughout the majority of 2020," said Edward Moya, senior market analyst at OANDA in New York.

Separately, Saudi Arabia told OPEC its monthly oil output fell by 660,000 bpd in September after major attacks on its energy facilities, while OPEC lowered its 2020 forecast for non-OPEC supply growth.

Additionally, Russian President Vladimir Putin plans to discuss stabilizing world oil prices when he visits Saudi Arabia on Monday for talks with Saudi King Salman and Crown Prince Mohammed bin Salman, the Kremlin said.

While signals from OPEC suggested a tighter oil market outlook, price gains were curbed by a report of rising stockpiles in the United States, the world's biggest oil producer.

U.S. crude stocks rose by 2.9 million barrels in the week to Oct. 4, the Energy Information Administration (EIA) said on Wednesday, more than double analyst expectations.

Additionally, OPEC member Nigeria secured a higher production target and a force majeure over exports from the Bonny Light stream was lifted.

Venezuela will boost its exports despite U.S. economic sanctions that have curtailed shipments as Indian refiner Reliance Industries plans to start loading Venezuelan crude after a four-month pause.

Uncertainty over U.S.-China trade talks resuming on Thursday had previously weighed on the market.

Still, there has not been a sustained rally or fall in prices in recent months, though both oil benchmarks are down more than 20% from April peaks.

"The oil market is neither bullish nor bearish. It is not trending. It has no reason or excuse to trend," said Tamas Varga of oil brokerage PVM.

"It would be stretching it to say that the market is paralysed, but it is in a stalemate. No one is willing to commit to either direction."

(Additional reporting by Jane Chung and Noah Browning; Editing by Bernadette Baum and David Gregorio)

By Jessica Resnick-Ault

Stocks mentioned in the article
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RELIANCE INDUSTRIES 1.42% 1416.35 End-of-day quote.24.55%
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