Oil prices rose by 1 percent on Wednesday morning and were set for the biggest third-quarter gain since 2004, as investors weighed the renewed talk of possible deeper OPEC cuts, along with the results of this week's EIA inventory report.
At 8:27am EST, WTI was topping the US$50 mark, rising 1.07 percent at US$50.01, while Brent was up 1.03 percent at US$55.71. Near 2:00pm EST, prices had climbed even further, with WTI up 2.16% at $50.55, and Brent up 2.14% at 56.32, as investors enjoyed a lower-than anticipated build in crude oil inventories.
Some producers favor extending the OPEC/non-OPEC deal for 3-4 months beyond March, while others believe it should be extended until the end of next year. Still another group-including Ecuador and Iraq-think that it's more cuts that should be discussed, Iraqi Oil Minister Jabbar al-Luiebi said on Tuesday.
However, al-Luiebi noted that Iraq didn't see a need for more oil production cuts currently, but it would support consensus within OPEC if such need arises. It is still too early to decide on actions to take beyond March next year, the Iraqi minister said, reigniting market speculation about whether OPEC would or should cut deeper to speed up the rebalancing of the market.
Asked by Reuters if Iraq would push for additional 1-percent cut at the November meeting, the minister said: "There are proposals and there are ideas... I don't think it will be implemented but it will be considered and studied."
"I can't see the market tightening unless OPEC cuts output further next year," Commerzbank strategist Carsten Fritsch told Reuters on Wednesday.
"An improving macro-economic backdrop should spur oil demand growth over the next couple of quarters and if OPEC increases its adherence to production cuts, higher prices will come," ANZ Research said in a note, as carried by Reuters. All things being equal, ANZ Research continues to see oil prices testing new 2017 highs by the end of the year.
Oil prices are supported today by Tuesday's report by the American Petroleum Institute (API), which reported a 1.4-million increase in crude inventories against expectations of a 3.5-million increase, while gasoline and distillate stockpiles declined in the week to September 15.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More