Oil capped the biggest three-day gain in 25 years after Opec said it’s ready to talk to other global producers to achieve “fair prices” and the US government reduced its crude output estimates.
Crude traded in New York surged 27 per cent in three days, the most since August 1990 when Iraq invaded Kuwait. The contract has climbed more than 20 per cent from its closing low on August 24th, meeting the common definition of a bull market.
The Organisation of Petroleum Exporting Countries, responsible for about 40 percent of the world’s supply, said in a monthly publication it’s willing to talk, “but this has to be on a level playing field.”
Prices erased last week’s drop to a six-year low as the Opec comments and signs that the US shale boom is fading faster provided optimism that a global supply glut will evaporate sooner than estimated.
A measure of oil-price fluctuations rose to a five-month high as traders sought protection from market swings. “The market turned around on two pieces of news,” Phil Flynn, senior market analyst for Price Futures Group Inc in Chicago, said. “The EIA cut its US output estimates and Opec says its ready to talk to others about cutting output.”
West Texas Intermediate for October delivery surged $3.98, or 8.8 per cent, to close at $49.20 a barrel on the New York Mercantile Exchange. It was the highest settlement since July 21st. Prices slipped as much as $1.62 to $43.60 earlier. Volume was almost double the 100-day average.
Bloomberg
