Oil prices rebound after three sessions of losses
WTI crude back above $45/bbl.; energy futures see broad climb
Oil futures rallied Tuesday, poised to snap a three-session losing streak, amid renewed efforts to shore up a proposed production cut by OPEC members.
December West Texas Intermediate crude CLZ6, +4.46% climbed $1.79, or 4.2%, to $45.11 a barrel on the New York Mercantile Exchange after tallying losses of more than 4% over the past three sessions. January Brent crude on London’s ICE Futures exchange LCOF7, +4.07% rose $1.68, or 3.8%, to $46.10 a barrel.
Oil traders have been positioning ahead of a meeting of the Organization of the Petroleum Exporting Countries scheduled for Nov. 30, where members are set to discuss a proposed production deal among members that would reel back about to 32.5 million to 33 million barrels a day from in a bid to shore up oil prices from record production of 33.83 million barrels a day in October.
Bloomberg reported that several OPEC members were engaged in a last-minute push to overcome divisions between the cartel’s biggest producers, which some analysts said contributed to Tuesday’s advance.
“There are some talks coming from OPEC that members are trying at least to heal the diplomatic divide among individual members,” said Peter Lee, an oil analyst at BMI Research. “This is what traders will be looking at—any small sign coming from [OPEC] will be reflected in the price.”
But technical trading has played a part in oil’s climb Tuesday, said Bill Baruch, chief market strategist at iiTRADER.
WTI oil has been trading in a range of $40 to $50 since early spring, and “we tested the bottom side of that range” Monday. Prices touched an intraday low of roughly $42.20 Monday, according to FactSet data.
“The risk to the upside now outweighs the risk to the downside with [the OPEC meeting] 15 days away,” said Baruch.
In contrast to other commodities and risky assets, oil prices have been broadly retreating despite the past week’s election victory by Donald Trump. Analysts attribute the dynamic to concern over the scale of the global crude oversupply.
But in a report Monday, the Energy Information Administration said oil production from seven major U.S. shale plays is forecast to fall by 20,000 barrels a day to 4.498 million barrels a day in December from November.
The market will also look ahead to the latest data on U.S. petroleum supplies due out from the American Petroleum Institute late Tuesday and the EIA early Wednesday. “Early expectations call for a slight build to crude stocks to be overshadowed by a stronger product draw,” said Robbie Fraser, commodity analyst at Schneider Electric.