HOUSTON – Crude oil prices rose above $50/bbl in New York for the first time since July on speculation that demand is picking up, according to a report in the Houston Chronicle.
West Texas Intermediate futures rose as much as 4.7%. A “new capital discipline” in the industry will allow demand to catch up with supplies, boosting prices, according to Gary Ross, founder and chairman of PIRA Energy Group.
Demand will climb more this year than previously projected amid cheaper fuel prices, OPEC Secretary-General Abdalla Salem El-Badri said yesterday in a statement to the International Monetary Fund.
“The most significant development now is the OPEC secretary general talking up the demand number,” Bob Yawger, director of the futures division at Mizuho Securities USA in New York, was quoted to say by the Chronicle. “He’s also predicting a significant drop in production growth, which is adding support.”
Oil has traded below $50/bbl after prices slumped to a six-year low in August amid speculation that a global glut will persist through next year. US stockpiles remain about 100 MMbbl above the five-year average, OPEC reportedly continues to pump more than its quota.
WTI for November delivery rose $1.62 to settle at $49.43/bbl on the New York Mercantile Exchange after touching $50.07. Brent for November settlement advanced $1.85 to $53.18 at 2:42 p.m. on the London-based ICE Futures Europe exchange.