Oil futures put forward a modest rally on Thursday. Even with global energy output expected to grow over the next 12 months and negative global economic data that could hurt energy demand, both US and Brent crude posted gains.
October West Texas Intermediate (WTI) crude rose $0.49, or 1.12 percent, to $44.07 per barrel at 17:05 GMT on the New York Mercantile Exchange. The increase in US crude prices come as it slipped 6% over the past two trading sessions.
November Brent crude also climbed $0.90, or 1.96 percent, to $46.75 a barrel on London’s ICE Futures exchange. Brent has been on the decline ever since topping $50 because of the present supply glut.
Traders have been concerned about the oversupply of crude. Their fears were confirmed this week by the International Energy Agency (IEA), the US Energy Information Administration (EIA), and the Organization of the Petroleum Exporting Countries (OPEC). All three organizations posted bearish reports pertaining to global oil supplies and how they will affect prices moving forward.
Despite falling by more than 600,000 barrels for the week ending September 9, US crude stocks still remained at 511 million barrels in the US. This is 55 million barrels higher than at the same time a year ago, the EIA noted.
Meanwhile, ahead of the September 26 to 28 informal OPEC meeting in Algiers, members Libya and Nigeria are now expected to ramp up oil production efforts and boost their exports. It is projected that as much as one million extra barrels of oil could flood the global market.
OPEC members are scheduled to hold informal talks to potentially put a cap on oil output. This is a move that is supported by Ecuador, Kuwait and Venezuela. Saudi Arabia has recently confirmed that it is open to negotiations, though it is already producing record levels of oil.
It was reported on Thursday that US retail sales dipped in August for the first time in five months. This has investors worried because this kind of weak economic data suggests that there may be a decrease in energy demand.
A stronger dollar has also helped limit oil’s Thursday rally.
Since falling to 12-year lows in February, oil prices have recovered by about 70 percent this year.
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