NEW YORK – Oil prices rose on Monday (Sep 12), joining the positive movement on equities markets despite a new forecast from producing countries for supplies to grow in 2017.
A barrel of West Texas Intermediate for October delivery rose 41 cents to close at US$46.29 on the New York Mercantile Exchange.
In London, North Sea Brent rose 31 cents to finish at US$48.32 per barrel for November delivery.
In its monthly market report, the Organization of the Petroleum Exporting Countries on Monday revised its 2017 forecast for non-OPEC oil supplies upwards by 350,000 barrels per day, indicating that, rather than contracting, supplies will now in fact grow by 200,000 to an average 56.5 million barrels per day.
“This year’s upward revision is due to US production holding up better than expected, while non-OPEC supply next year is set to get a boost from new production at Kazakhstan’s Kashagan oil field,” Matt Smith of ClipperData noted in a blog post.
Russian officials are due to join an informal OPEC meeting this month at which producing countries have suggested officials may discuss limiting production to stabilise world prices.
In closely watched remarks on Monday, US Federal Reserve Governor Lael Brainard painted a dovish picture of the US economy, saying “prudence” was still required before removing the Fed’s current accommodative interest rate policies.
Changes in interest rate policy can influence demand for the US dollar and its value on currency exchange markets, which affects sales of dollar-denominated oil futures.
Fed policymakers are due to meet next week to review interest rate levels and markets but have been divided on the need for a near-term rate hike.
Markets did not react strongly to Brainard’s remarks, which may have relieved some worries that the Fed could raise rates as soon as next week. More hawkish remarks on Friday from Boston Fed President Eric Rosengren sent stock markets tumbling by two percent.
Following Brainard’s speech at the Chicago Council on Global Affairs, Fed futures prices showed an 85 percent probability that the current target rate of 0.25-0.5 per cent will remain unchanged following next week’s meeting, up from 76 per cent on Friday.