Oil prices rose over 1 per cent on Monday, with traders citing opportunistic buying after sharp declines in the previous week that brought prices to their lowest since early August because of ongoing weak fundamentals.
International Brent crude oil futures were trading at $46.20 per barrel at 0543 GMT, up 62 cents, or 1.36 per cent, from their previous close. The global benchmark on Friday had fallen as low as $45.08, its weakest since August 11.
US West Texas Intermediate (WTI) crude futures were up 65 cents, or 1.5 per cent, at $44.72 a barrel. WTI hit $43.57 on Friday, its lowest since September 20.
Last week’s losses were the steepest since January, and took nearly 15 per cent off a one-year high for Brent at $53.73 a barrel that was hit in the first-half of October.
Overall market fundamentals remain weak.
Analysts said a planned output cut to be decided during a meeting on November 30 by countries from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers like Russia was encountering hurdles.
“Individual country details still remain challenging to agree upon,” Barclays bank said in a note to clients.
“Iraq boosted production while Saudi Arabia asked for exceptions. Russia is still sitting on the sidelines, and none of the non-OPEC members consulted thus far has expressed any intention of a cut,” Barclays said.
There are also risks that the oil supply overhang, which has dogged markets for the last two years, could continue as OPEC’s de-facto leader Saudi Arabia has threatened to increase production again should the upcoming meeting between producers lead to no result.
Even if Saudi Arabia does not follow through on that threat, its exports could rise.
“Saudi local oil demand is falling, and just maintaining current output could imply higher exports,” Barclays said.
In the United States there were also signs of rising future output as the number of drilling rigs looking for new oil to produce rose by 9 to 450 in the week to November 4, the highest level since February.
“Since its trough on May 27, 2016, producers have added 134 oil rigs (+40 percent) in the US,” Goldman Sachs said in a note.