Crude oil prices have reached a three-week high amid expectations that the Organisation of Petroleum Exporting Countries (OPEC) may take further action to stabilise crude prices at their meeting in Algeria next month.
Brent oil jumped to $47.59, the most since July 18, while the US benchmark WTI went up by 6.04%, the largest soar since April.
Oil prices had already been impacted last week following comments by the Saudi energy minister Khalid al-Falih about OPEC taking further action.
Crude Oil Prices Reach 3-Week High
However, according to market sources, traders remain doubtful that OPEC’s meeting may result in any specific actions, as earlier attempts by the Organisation to freeze production levels have failed.
This was mainly due to Iran’s refusal to take part, amid the country’s attempts to raise production following the cancellation of Western sanctions, leading Saudi Arabia to back out as well.
Still, although the recent gains may bring some optimism to the market, the reinforced drilling activity in the US and the current global oversupply are expected to maintain prices under pressure, at least in the short-term.
Crude Oil Prices Rise Over Rig Count Boost
Also last week, Venezuela’s oil minister Eulogio del Pino had said that OPEC members and other exporting countries should meet and analyse the “scenario for the winter”.
The OPEC meeting will take place on the sidelines of the International Energy Forum in September and could reportedly restore talks on crude oil output cuts if oil prices continue to go down.
In a monthly oil report disclosed earlier last week, OPEC said it expects global oil demand to grow by 1.22 million barrels per day (bpd) on average this year, a 30,000 bpd rise compared to July.
At a global level, oil demand is expected to grow by 1.15 million bpd next year.
In the meantime, the US has shown another rise in drilling activity, with the number of operating rigs rising by 15 last week to 396, according to figures released by Baker Hughes.