Oil prices rose around 2% on Tuesday to move away from multi-month lows struck the day before, pushed higher by expectations of falling shale output and renewed optimism that OPEC will deliver on touted production cuts, according to Reuters.
U.S. crude futures for December delivery CLc1 had climbed 90 cents, or 2.1%, to $44.22 a barrel by 07:46 GMT. They struck their lowest in nearly two months the session before, as reported by Reuters.
January Brent futures LCOc1 were up 71 cents, or 1.6%, at $45.14 per barrel.
Prices were buoyed by expectations that U.S. shale oil production will in December fall to its lowest since April 2014 at 4.5 million barrels per day (bpd).
”News of Qatar, Algeria and Venezuela leading the push for the OPEC deal were music to the ears for oil traders, boosting crude oil prices,” IG Group`s market strategist Jingyi Pan said.
”Most notably, key producers – Iran and Iraq – were also reported to be contemplating the proposals, reigniting hopes of a deal in the OPEC`s upcoming meeting.”
Saudi Arabia`s energy minister said it was imperative for the Organization of the Petroleum Exporting Countries to reach a consensus on activating a deal made in September to curb production, according to Algeria`s state news agency APS on Sunday. OPEC members are due to meet later this month.
Also supporting oil markets was news that Harold Hamm, chief executive at U.S. independent oil producer Continental Resources, could serve as energy secretary when Donald Trump becomes U.S. president.
Hamm, if nominated, would be the first U.S. energy secretary drawn directly from the industry, a move that would jolt environmental advocates but bolster Trump`s pro-drilling energy platform.
U.S. crude prices are also likely to be supported by short-covering, said Philips Futures` investment analyst Jonathan Chan.
”The current active contract (for U.S. crude) is expiring. The last trading day is next Monday, so some oil traders are already starting to close out their positions to roll over,” said Chan, based in Singapore.
Elsewhere, Iraq will cut exports of Basra crude from its southern ports to 3.16 million bpd in December, compared with 3.24 million bpd in November. The allocated December volume will be the lowest in four months.
Meanwhile, returning Libyan crude oil production could cap market gains.
A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday. The reopening of the eastern ports has helped Libya`s national production double to around 600,000 bpd.