Rhetoric for OPEC on a production agreement sparks frenzy among oil traders coming off several straight sessions of declines. File photo by Monika Graff/UPI |
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NEW YORK, Nov. 15 (UPI) -- A rally in crude oil prices was fed by the latest frenzy over OPEC production rhetoric, which overshadowed European reports Tuesday of stagnant economic growth.
Crude oil prices have been on a steady decline for much of November as doubts persisted over whether the 14 members of the Organization of Petroleum Exporting Countries could coordinate their policies enough to formalize a production cap proposed in September. Several members are pressing for an exemption and total OPEC output is already above the high end of the cap offered during meetings in Algeria.
In remarks published late Monday, OPEC Secretary General Mohammad Sanusi Barkindo reiterated support for a formal agreement by stating that "our industry works best with collaboration, cooperation and consensus."
A production agreement could theoretically pull the energy market back into balance and the latest comments were enough to renew optimism for investors coming off several sessions of declining oil prices. The price for Brent crude oil was up 3.3 percent at the start of trading Tuesday to $45.92 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was higher than the previous close by 3.5 percent to open the day at $44.82 per barrel.
A research note from brokerage PVM said Tuesday that any deal from OPEC would be only a face-saving move and not do much in terms of balancing the market. Any rally that followed a formal agreement would likely boost confidence in U.S. shale markets, potentially increase production there and add even more oil to an already oversupplied market.
"OPEC is in an impossible situation," the report read.
In the global economy, the European Union's statistics office said third quarter gross domestic product for countries that use the euro currency was up 0.3 percent to 1.6 percent in the third quarter. That's the same pace as recorded during the second quarter of 2016.
Of the major economies in the European Union, the British and German economies both slowed during the third quarter. That's compared with the United States, where the European office said GDP increased at by 0.7 percent compared with the second quarter.
