Oil Prices Rebound On Unrest, Hopes For Output Deal

​World oil prices rebounded Monday on supply concerns in Libya and Nigeria, and after OPEC member Venezuela indicated a deal to limit output was close.

Oil Barrels

Additional support came from the weaker US greenback, which makes dollar-priced commodities like oil cheaper for buyers using stronger currencies.

At about 1645 GMT, Brent North Sea crude for delivery in November won 51 cents to $46.28 a barrel compared with Friday’s closing level.

US benchmark West Texas Intermediate for October added 59 cents to $43.62 a barrel.

Major crude producer states are due to meet in Algeria next week to discuss the global supply crisis and overproduction that has hammered prices for two years.

Venezuelan President Nicholas Maduro said Sunday that participants in the talks — the 14-nation OPEC cartel and Russia — are now working on a deal and that he had discussed the issue with his counterparts from Iran and Ecuador.

“The price of oil rose amid a backdrop of US-dollar weakness and speculation surrounding an output freeze at this month’s producer meeting in Algiers,” said CMC Markets analyst Jasper Lawler.

“Venezuelan President Maduro has said OPEC and non-OPEC countries were close to agreement to stabilise the market.

“Given the number of false starts on the OPEC rumour mill, the Venezuelan president’s comments should be taken with a grain or two of salt.

“But in combination with two of Libya’s ports used for oil exports falling under militia control, the supply picture looks cloudy enough to warrant some bullishness after a down-week.”

Without revealing details, Maduro said Sunday that he hoped to make a firm announcement by the month’s end.

“Oil prices have risen so far today, with the market for Brent jumping higher… after comments from Venezuela’s president over the weekend,” said analyst David Cheetham at brokerage XTB.

“Maduro said on Sunday that OPEC and non-OPEC countries were close to reaching an agreement to stabilise the price, and these comments have led traders to speculate that we could see a production freeze announced next week.”

Oil had fallen last week on supply glut woes.

However, fighting erupted in Libya on Sunday as UN-backed unity government forces attempted to retake oil ports seized last week by a rival administration.

The fighting led a Maltese-flagged tanker to turn back out to sea for safety, abandoning plans to load crude oil at Ras Lanuf. It would have been the port’s first export since 2014.

Libya has Africa’s largest oil reserves but has exported only a few tankers of crude in recent months as a result of unrest.

Added to the supply backdrop on Monday were intensifying concerns over Nigeria, which is the biggest crude exporter in Africa.

A militant group on Monday claimed an attack on a crude oil pipeline in Delta state, southern Nigeria, in the second attack on the same line in less than a week.

– Supply glut –

Last week, oil prices had spiralled lower on gloomy market forecasts, profit-taking and ever-present worries over the global supply glut, ahead of the producers’ meeting on September 26-28.

New York crude had shed 6.6 percent in value and Brent fell 4.5 percent.

Crude has been dogged by a stubborn supply glut since late 2014, with prices hitting near 13-year lows at the start of this year.

Traders are also eyeing a US Federal Reserve policy meeting this week for fresh clues about the state of the world’s top economy and some guidance on its plans for interest rates.

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