LONDON — Oil rose further Monday on hopes that OPEC producers would agree to freeze output next month and ease the global supply glut.
At 1130 GMT, US benchmark West Texas Intermediate for September delivery added 24 cents to $44.73 a barrel.
Brent North Sea crude for October won 25 cents to $47.22 per barrel.
Saudi Arabian oil minister Khalid Al-Falih hinted last week that OPEC could discuss action to stabilize markets at an informal gathering in September.
That helped prices rebound since tumbling into a bear market earlier this month.
Any agreement to curb production would help rebalance the crude oil market, where output has been running ahead of demand.
Both oil contracts rose more than six percent last week following the Saudi minister’s remarks.
“Will there or won’t there be a credible meeting and should anything be expected of it? The one word answers are ‘maybe’ and ‘no’, but OPEC have absolutely nothing to lose from talking about having an informal discussion on production restraint,” said PVM analyst David Hufton.
“The meeting is unlikely to yield anything because OPEC are caught in a squeeze.
“On the supply side it is their own increase in production that is prolonging the price depression – but if they freeze or restrain production to lift prices they will stimulate competing non-OPEC supply and lose market share.”
Some analysts have cautioned against putting too much hope on an output freeze, because previous talks earlier this year have resulted in disagreement. “An agreement is still improbable,” research house Capital Economics said in a market commentary.
It said most oil-producing nations are already churning out crude barrels close to their capacity and any accord to limit output “is unlikely to accelerate market rebalancing by much”.
A monthly report from the Organization of the Petroleum Exporting Countries showed Saudi Arabian oil production was at nearly 10.5 million barrels per day in July – a record high, above peak levels seen the same time last year.
OPEC’s informal meeting will take place on the sidelines of the International Energy Forum in Algeria on Sept. 26- 28, ahead of a planned meeting due at the end of November.
Moreover, according to media reports on Monday, Russia is opening up to an agreement with other major oil producers to freeze output in an effort to stabilize the market.
Alexander Novak, Russia’s energy minister, said his country is consulting with Saudi Arabia and other producers to jointly cap production “if necessary,” an Arabic newspaper reported.
“We are cooperating in the framework of consultations regarding the oil market with OPEC countries and producers from outside the organization, and are determined to continue dialogue to achieve market stability,” Novak said.