Despite most crude-oil prices starting lower during the week, most crude futures recovered to new highs with some benchmarks recording their highest prices in the past months due to market optimism that demand for crude oil prices will rise along with the outlook that the producers will continue to cut their daily production in accordance with the OPEC deal which was extended months ago in their efforts to help oil prices rise.
On Monday, the West Texas Intermediate for October on the New York Mercantile Exchange crude rallied by as much as 3.1% to $52.22 per barrel which was the highest seen since last April. The Brent crude was also up by 3.8% to $59.02 per barrel which was the highest seen in the past months.
Brent crude prices hit an intraday high of $56.91 on Friday which was the highest seen since last March. Both benchmarks recorded their rally for the fourth straight session in a row.
Analysts have commented that the recent climb in oil prices for the past couple of weeks is attributed to the efforts of the OPEC along with non-OPEC producer Russia in cutting down oil production, therefore, preventing global oversupply as well as raise oil prices to normal levels. Although the organization was not able to reach its goal of bringing oil prices higher than $60 during the first agreement.
Oil investors placed higher bets on U.S. crude futures rallying to its highest level in the past month as reported by the U.S. Commodity Futures Trading Commission.
Although the OPEC agreed for the second time earlier this year to extend their agreement to continue cutting daily output, the producers under the organization as well as other participating countries did not agree last week to further extend the deal in their efforts to help avoid global gut which has sent oil prices plummeting over the past three years.
The OPEC originally agreed to cut around 1.8 million barrels per day last year which includes the participation of ten OPEC countries as well as Russia. They then extended the agreement last May to continue cutting production until March next year.
Reports last week revealed that the producers were able to comply with the agreement sending most oil prices higher. The rise in U.S. crude futures, which has led the markets to question the role of the country in oil production, has weighed in on oil prices.
On Tuesday, oil prices still hovered around multi-month highs despite sliding slightly lower during the trading session. Despite the OPEC not deciding to extend oil cuts yet, Russia’s energy minister hinted that an extension might be in order and is being considered. The organization is set to meet this coming November in Vienna.