Oil prices edged higher on Tuesday, ending a four-day losing streak, as traders weighed a bearish price outlook from the IEA and a lowered US estimate for crude production.
US benchmark West Texas Intermediate for December rose 34 cents to $44.21 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for delivery in December, the global oil benchmark, climbed to $47.44 a barrel in London, a gain of 25 cents from Monday’s settlement.
The market was “bouncing back and forth today,” pulled by reports from the International Energy Agency and the US Department of Energy, and OPEC suggestions that the cartel may cap production at 30 million barrels, said Phil Flynn of Price Futures Group.
The Paris-based IEA, in a report on Tuesday, forecast that the global oil market will only slowly recover to $80 a barrel by 2020.
Despite that report, Flynn said, “we think that with comments from OPEC that – while they may not pump less oil – they may use their current production levels as some kind of a ceiling, oil is getting a little bit of a rally today.”
Tim Evans of Citi Futures took issue with that interpretation though.
“There’s background talk that OPEC may adjust their quota in December, but with an increase to account for the inclusion of Indonesian production in the total, not the more constructive cut the bulls may be hoping for,” he said.
Meanwhile the US Department of Energy projected that US crude oil production will fall to an average 8.77 million barrels a day in 2016 from 9.29 million barrels this year. The previous estimate for 2016 was 8.86 million barrels a day.
Traders will have to wait an extra day for the closely watched weekly DoE report on US inventories, delayed until Thursday because of a government holiday Wednesday.
