Brent Crude was trading at about $51 a barrel yesterday and is more than 20% up this month, from $42 in early August, and thereby officially in a bull market.
West Texas Intermediate for September delivery rose $1.37, or 2.9%, to $48.16 a barrel on the New York Mercantile Exchange, the highest intraday level since 7 July.
In Asia overnight Brent Crude came off slightly to trade at $50.8 as investors took profits and amid concern that the rise has been overdone on false expectations that Opec will curtail supply. It rose again this morning, touching a high of $51.22 in early trade, to stay on track for a seventh day of gains.
Analyst Gervais Williams, managing director of Miton Group, said oil has staged a very strong recovery in the last three weeks, partly due to the weakness of the dollar. He said “people are probably speculating”.
Fawad Razaqzada, a market analyst at Forex.com, said: “Some believe – or more appropriately, hope – that the OPEC may come up with a plan to support prices at its informal meeting next month, something which we doubt will happen.”
Optimists point to a fall in US crude supplies, according to US Energy Information Administration data.
Russian energy minister Alexander Novak said that the country was willing to discuss a freeze after Saudi Arabian energy minister Khalid Al-Falih said that informal talks next month may lead to action to stabilise the market.
A deal to cap production was proposed in February but talks ended in April with agreement.
Hans van Cleef, of ABN AMRO, said he doesn’t see “any king of an agreement” at the next Opec meeting which takes place in Algeria from September 26 to 28 on the sidelines of the International Energy Forum.