Hurricanes in the Gulf of Mexico have pushed up crude inventories as some USA refineries have been shut by flooding.
The GIQ Survey respondents by an overwhelming 71% polled that OPEC should continue its supply cut agreement when it expires at the end of the first quarter of 2018, but that said, 29% of respondents were of the view that the oil exporters should abandon their output cuts and stop handing over market share to U.S. Shale oil producers.
US benchmark October West Texas Intermediate crude, which expires at the day's settlement, rose 87 cents, or 1.8%, to $50.35 a barrel on the New York Mercantile Exchange, headed for its highest settlement since late May.
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It's hard to understand why traders have been so inspired of late to boost prices based on rumours but no concrete vows swirling among OPEC members: for example, while Jabbar al-Luaibi, oil minister for Iraq, was reported on Wednesday to be among a group that think the cuts should be increased by 1 percent, he was also quoted as saying with regards to an output extension, "It is premature to come to a conclusion or decision seven months before March". USA crude stockpiles likely rose by 3.5 million-3.9 million barrels for the week ended September 15, analysts polled by Reuters and Bloomberg estimated on Tuesday. All told, total USA petroleum stocks fell by 6.6 million barrels. "They're not replacing inventories for current demand".
Traders were now looking ahead to a meeting scheduled in Vienna on Friday between OPEC and other producers regarding a possible extension of production caps. The global benchmark crude traded at a premium of $5.32 to November WTI. Distillate inventories, a category that includes diesel, dropped by 5.69 million barrels.
Still, "refinery runs rebounded a solid 1.2 million barrels per day, in whole part due to returning refining activity on the U.S. Gulf", he said.
Oil prices have been in an uptrend over the past three weeks after Hurricane Harvey, which struck Texas and the oil-and-gas rich U.S. Gulf of Mexico on August 26, shut down almost a quarter of the U.S. refining capacity of nearly 18 million bpd. "But concerns about a pullback of the Iran nuclear deal will make it hard for the market to sell oil, even at these levels".