Oil prices reached their highest level in more than five weeks on Tuesday, as the market rode optimism over potential producer action to prop up the market. Brent crude futures hit a high of $48.74 per barrel, their highest since July 7, in morning trade. They were trading at $48.59 per barrel, up 24 cents from their last close, and around 17% higher than the $41.51 low for the month on Aug. 2.
US West Texas Intermediate crude reached $46.16 per barrel, their highest since July 15, before easing to $45.98, up 24 cents from the previous close. The level was roughly 17% above its $39.19 monthly low from Aug. 3, Reuters reported.
Oil production losses in Nigeria, where more than 700,000 barrels per day was missing due to militant attacks and pipeline problems, were also helping to support prices in the Atlantic Basin. While there were early losses as some investors cashed in during Asian hours, the market has held its roughly 16% rally since early August. Much of the gains have been attributed to investor optimism that oil producers will take action to rein in ballooning oversupply. The hopes stemmed from comments by Saudi Energy Minister Khalid al-Falih, who said his country would work with others to stabilize oil markets.
But a slew of analysts are skeptical of any such deal, and even Nigerian Oil Minister Emmanuel Ibe Kachikwu expressed doubts.
“Optimism on my part is quite sparse, but I believe engagement with the 70% oil producers might have an impact,” Kachikwu wrote on his Twitter account.
Still oil production losses in Nigeria, which have been beset by escalating militant attacks in the oil rich Niger Delta region this year, as well as lower output in Venezuela, were backing higher markets. Venezuela, which holds the world’s largest crude oil reserves, is also on track for its steepest annual oil output drop in 14 years, as it struggles with an economic and political crisis and years of underinvestment and mismanagement.