Brent at 6-week high on Opec freeze talk

Additionally, data from the Energy Information Administration on Wednesday showed that USA crude inventories unexpectedly fell by 2.5 million barrels last week, more than forecasters had estimated, and following three straight weeks of builds.

Saudi Arabia is sending signals that it could boost its crude oil supplies in August, even higher than its record 10.67 million barrels per day reached in July, as it gets ready for tough talks next month for a global output freeze pact.

West Texas Intermediate for September delivery rose US$1.43 to settle at US$48.22 a barrel on the New York Mercantile Exchange, the highest since July 1. Brent ended the session 2.1 percent higher at $50.89 a barrel while US crude settled 3.1 percent higher.

The latest string of gains comes primarily because of continued talk from the world's largest exporters, including both the Organization of the Petroleum Exporting Countries and Russian Federation, to cooperate and revisit a deal to freeze output at current levels to keep it from falling back below $40 a barrel.

US crude oil imports averaged 8.2 million barrels per day last week, down by 211,000 barrels per day from the previous week.

The rally has also been driven by short covering by speculators including hedge funds and other money managers, who had amassed record short positions.


Brent crude had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October. The WSJ Dollar Index, which measures the dollar against a basket of currencies, recently fell 0.3%.

Some Gulf oil exporters have very low output costs, but other producers such as Iran and Venezuela need oil prices above US$100 in order to balance budgets.

Opec members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria on 26 to 28 September. Both grades have risen more than 20 percent from lows hit in early August.

"This is a double whammy for the oil market".

The Organization of the Petroleum Exporting Countries is due to meet in Algeria next month and officials have said an agreement on controling production could emerge.

But officials from Saudi Arabia and Russian Federation this month have acted to reassure markets, suggesting that producing countries could agree to limit output in an effort to stabilize prices.


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