Oil futures logged their highest settlement in five weeks on Tuesday, as the Organization of the Petroleum Exporting Countries forecast big cuts to oil investments that are expected to ease production and reduce global crude supplies. Speculation over a possible meeting among the major oil producers also provided support for oil prices, ahead of weekly updates on U.S. petroleum supplies.
November West Texas Intermediate crude CLX5, +0.70% climbed $2.27, to settle at $48.53 a barrel on the New York Mercantile Exchange. That was the highest settlement since Aug. 31. “For now, the OPEC comments are triggering upward movement and expectations around the upcoming inventory data,” said Naeem Aslam, chief market analyst at AvaTrade.
OPEC Secretary-General Abdalla Salem el-Badri, speaking at a conference in London Tuesday, said oil prices are set to rebound as steep cuts in global oil investments crimp supplies. He expects global oil-and-gas project investments to be down by 22.4% this year.
In a report Tuesday, the Energy Information Administration estimated that crude production was 120,000 barrels a day lower in September than in August and said that output is expected to continue to decline through next August.
News of a potential cooperation between OPEC and Non-OPEC oil producers also helped lift crude oil prices. But both Nymex and Brent prices have still fallen by roughly 9% year to date.
“Oil prices dropping to this level and staying here for a prolonged period of time is definitely hurting major oil producers, Russia included,” said Daniel Ang, a Phillip Futures Energy analyst, who said the market is finding some support after Russia’s energy minister said his country was prepared to meet with members and nonmembers of [OPEC] to discuss the oil market.