Oil advanced to highest level since July after the head of Organisation of Petroleum Exporting Countries (Opec) said that the group had been “very conservative” with its oil demand estimates and that there was no global recession on the horizon.
Futures rose as much as 1.6% in New York on Tuesday, gaining for the fifth consecutive day. At a speech at the World Energy Congress in Abu Dhabi, Opec Secretary-General Mohammad Barkindo said the cartel had been conservative with its oil demand estimates. Investors were also keeping an eye on the upcoming weekly inventory report which is forecast to show US crude supplies contracted by 2.9 million barrels.
Crude is still down more than 10% from its peak in April as a prolonged US-China trade war dents the demand outlook. Nevertheless, this Thursday’s meeting of the Opec+ Joint Ministerial Monitoring Committee in Abu Dhabi, as well as Saudi Energy Minister Prince Abdulaziz bin Salman‘s commitment to maintain Saudi policy, are keeping the market focused on production curbs.
“The focus is going to be on the macro oil picture; it is going to be on the JMMC meeting,” said Olivier Jakob, managing director of consultant Petromatrix GmbH. “The new Saudi energy minister has not said anything that deviates from the previous policy.” West Texas Intermediate oil for October delivery increased 62 cents to $58.47 a barrel on the New York Mercantile Exchange as of 11:14 am New York time.
Brent for November settlement rose 96 cents to $63.55 a barrel on ICE Futures Europe Exchange. The global benchmark oil traded at a $5.13 premium to WTI for the same month.
“There is nothing radical in Saudi Arabia; we all work for the government, one person comes, one person goes,” Prince Abdulaziz said at the World Energy Congress in Abu Dhabi on Monday, his first public comments since he was appointed. Saudi Arabia has shouldered the bulk of Opec+ production cuts, and is pumping about 500,000 barrels a day less than its agreed cap.
This week sees the publication of three key monthly market reports. The US Department of Energy will publish its Short-Term Energy Outlook later, while Opec will release its report on Wednesday and the International Energy Agency’s review is due Thursday.