Oil price up on Opec plan

Oil gained after Opec’s president said the group will hold informal talks in Algiers next month and predicted the current bear market would be short lived.

Members of the Organisation of Petroleum Exporting Countries are in “constant deliberations” on stabilising the market and oil prices are expected to rise in the latter part of 2016, according to a statement by Mohammed bin Saleh Al-Sada, Qatar’s energy and industry minister and the group’s current president.

Brent crude for October settlement was 75 cents higher at $45.02 a barrel on the London-based ICE Futures Europe exchange at one stage yesterday.

Prices had lost 2 cents to $44.27 on Friday.

The global benchmark traded at a premium of $1.71 to WTI—West Texas Intermediate — for October.

Oil is fluctuating after tumbling more than 20% into a bear market last week.

US drilling is expanding as nationwide crude inventories continue to rise, keeping stockpiles more than 100 million barrels above the five-year average.

Opec members always intended to discuss the market when they gather for the International Energy Forum in Algeria next month, but there are no plans to renew the failed push for a production freeze, according to two delegates from the group.

“If the market is rebalanced next year, you don’t need a freeze,” said Giovanni Staunovo, an analyst at UBS.

He agreed with Al Sada’s view that oil demand will be higher in the second half compared with last year.

Russia doesn’t see a need for the time being to re-engage in freeze talks, energy minister Alexander Novak said yesterday.

Russia’s talks earlier this year with Opec members about capping production contributed to the rebound in prices from a 12-year low, although the deal ultimately failed in April after Saudi Arabia refused to back the accord because Iran wouldn’t join.

US drillers added seven rigs last week, Baker Hughes had said Friday. The count is the highest since March and has climbed for six weeks, the longest stretch in a year.

The nation’s crude stockpiles increased for a second week to 522.5 million barrels through July 29, keeping supplies close to April’s record of 543 million, the highest in at least two decades.

Meanwhile, money managers increased wagers on declining WTI prices to a record 218,623 contracts amid rising US crude inventories.

Short positions on Brent crude rose to 125,431 lots, the highest since January.