London-Brent crude settled up 4 percent for September and U.S. West Texas Intermediate (WTI) crude rose 8 percent, helped by an OPEC announcement in Algeria that it aimed to remove some 700,000 barrels per day (bpd) from the market.
A survey found that OPEC output likely rose to 33.60 million barrels per day in September from a revised August record of 33.53 million bpd as Iraq boosted crude exports and Libya reopened some of its main oil terminals.
Brent for November delivery LCOX6 settled down 18 cents, or 0.4 per cent, at $49.06 a barrel, before expiring as the front-month contract. For both the week and month, it rose about 4 per cent. For the quarter it fell around 1 percent.
WTI’s front-month, also November CLc1, closed up 41 cents, or nearly 1 percent, at $48.24 per barrel. It gained 8 per cent on the week and month, and was almost flat on the quarter.
“Yes, it’s a second straight monthly gain for oil but the question is whether we can continue punching higher from here,” said David Thompson, executive vice-president at Powerhouse, a commodity-focused broker in Chicago.
“If we look at OPEC’s latest production figure, it gives them an even larger amount to cut. None of the actors involved are flushed with cash. They’re all petro states suffering from low oil prices. It’s very difficult to see them cut production in a meaningful way when they need the money.”
OPEC said on Wednesday it had achieved agreement in principle to cut output to between 32.5 million bpd and 33.0 million bpd from about 33.5 million bpd, estimated by Reuters to be August’s production level. Details will be finalized at OPEC’s policy meeting in November, group officials said.
The cuts were forced by a persistent glut that has more than halved prices from mid-2014 highs above $100.
Russia, not an OPEC member but a large producer pumping crude at record highs, said it would find a way to freeze production if it reaches a deal with OPEC.
The United States, also a non-OPEC member and now the biggest oil producer, said on Thursday it had little faith in the OPEC plan. U.S. energy envoy Amos Hochstein told Reuters that any price gains from the cuts would trigger higher U.S. production, which would ultimately defeat the deal.
A weekly reading on the U.S. oil rig count showed local drillers added 95 rigs for the third quarter, the most in any quarter since 2014.