The highest average spot price was observed on Bonny Light oil produced in Nigeria, which amounted to $48.04 per barrel.
The cut in rigs is starting to take a toll on USA crude production, which fell by 40,000 barrels a day to 9.1 million last week-the smallest output since November 2014, according to Energy Information Administration data.
Fatih Birol, the executive director of the global Energy Agency (IEA), told CNBC Tuesday low prices will prompt USA producers to cut output, creating upward price pressure.
Reports that producer Russian Federation was willing to discuss the global supply glut situation that has been weighing on the market also supported prices.
Energy stocks were the best peformers in the US market.
“That’s starting to wake up a few of the folks out in this space”, Bob Yawger, director of the futures division at Mizuho Securities United States of America, said.
On the Multi Commodity Exchange, crude oil for delivery in November was up by Rs 8 or 0.26 per cent at Rs 3,090 per barrel with a business turnover of 130 lots. It was the US benchmark’s largest one-day gain since September 16. It is the highest settlement since August 31.
Aramco also reduced the official selling price for Medium grade crude to Asia to a discount of $3.20/bbl below the regional benchmark, compared with a $1.30 discount for October sales.
But when bearish trades pile up, sharp rebounds like Tuesday’s can become common, as they have in the oil market this year. Bearish traders are apt to close out bets to protect themselves when small signs suggest oncoming rallies. And it was the fourth in the past five months that USA production has declined. Investment in petroleum-related projects was expected to be down by over 22 percent in 2015, el-Badri said.
“It is very clear that oil prices have bottomed out”, said Nysveen.
The Institute for Supply Management said its gauge on USA services industries fell to its lowest level since June.
The price for Brent crude could be $55 this year and $62 next year.
Looking at demand 1st, and then looking at the supply, and how it has been affected since the Crude Oil price dive, That is how you know the strategy is working.
“Geopolitical tension created by Russia’s involvement in Syria makes cooperation with OPEC highly unlikely”, said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. Higher production is the only way Russian Federation can keep its revenues stable, he said.
“This could cause prices to spike upward, starting a new cycle of strong production growth in USA shale oil and subsequent volatility“, he said. The nation pumped 9.1 million barrels a day during the same period, the lowest level since November.
The US dollar slipped against major currencies on continued expectations the Fed will not hike rates this year for the first time in nearly a decade.