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Investing.com -- U.S. crude futures surged as much as 5% on Tuesday before paring earlier gains late in the session, as investors continued to react to news that Russia and Saudi Arabia have met recently to discuss the downturn in global oil prices with further talks potentially on the forefront.
On the New York Mercantile Exchange, WTI crude for November delivery traded in a broad range between $45.73 and $48.60 a barrel, before closing at $48.54, up 2.27 or 4.93% on the session. At one point, Texas Long Sweet futures reached its highest level since September 1. While U.S. crude futures are up by 4.50% over the last month of trading, they have still not eclipsed $50 a barrel since late-July.
On the Intercontinental Exchange (ICE), brent crude for November delivery also rose sharply, surging above $51 a barrel for the first time since Sept. 4. Brent crude traded between $48.87 and $51.99, before settling at $51.89, up $2.66 or 5.38% on the day. The spread between the international and U.S. domestic benchmarks of crude stood at $3.35, above Monday's level of $3.05 at the close of trading.
Energy traders continued to digest comments from Russian energy minister Alexander Novak that his nation will continue to consult with Saudi Arabia on ways to help stabilize the global energy market. Crude prices are down by more than 50% since OPEC roiled global markets last November with a strategic decision to leave its production ceiling unchanged above 30 million barrels per day, in an effort to regain global market share. Russia, which is among the top three oil producers in the world, has reportedly met with Saudi Arabia at least twice in the last six months to confer on a host of major issues impacting global energy prices. Earlier this summer, Russian oil production surged to an all-time post-Soviet Union high of 10.75 million bpd.
Elsewhere, the U.S. Energy Information Administration (EIA) forecasted that global supply next year will rise to 95.98 million bpd, a level 0.1% lower than its estimates in September. In its October Short-Term Energy Outlook, the EIA also said that demand is expected to rise 270,000 bpd to 95.2 million, amid stronger projections for Chinese demand growth. The forecasts represent a 0.3% increase from the EIA's demand projections in September.
Investors also await the release of the American Petroleum Institute's weekly inventory report after the close of trading for further indications on the supply-demand balance in U.S. markets.Last week, the EIA said U.S. crude stockpiles rose by 4.0 million barrels for the week ending on Sept. 25, significantly above estimates for a 0.5 million draw. At 457.9 million barrels, U.S. crude inventories remain near its highest level at this time of the year in at least 80 years.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.60% to 95.57 in U.S. afternoon trading. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
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