Oil hits month-high; eyes on less output, Saudi-Russia talks

Global crude benchmark Brent returned to above $50 a barrel, breaking range-bound trades since early September that have largely seen the market trade in a $5 band.

A weakening dollar added support for oil, aside from bets that the U.S. oil rig count could tumble again this week after last week’s unexpectedly sharp decline of 26 rigs.

Brent was up $2.40, or 4.8 percent, at $51.65 a barrel by 12:11 p.m. EDT (1611 GMT). Its session peak, a penny shy of $52, was the highest since Sept. 3.

Traders said Brent saw technical buying at above $50 as it headed for its first three-day gain in a stretch after Monday’s rise of more than 2 percent and Friday’s climb of nearly 1 percent.

West Texas Intermediate (WTI), the U.S. crude benchmark, rose by $1.95, or 4.2 percent, to $48.21.

“We have reduced the probability of a return to the $37-$38 area per nearby WTI,” said Jim Ritterbusch of oil consultancy Ritterbusch & Associates in North Wabash, Chicago. “We will maintain a longstanding view that price declines below this support level are virtually off of the table.”

Global oil demand will grow by the most in six years in 2016 while non-OPEC supply stalls, according to a monthly U.S. energy report that suggests a surplus of crude is easing more quickly than expected.

Total world supply is expected to rise to 95.98 million barrels a day in 2016, 0.1 percent less than forecast last month, the U.S. Energy Information Administration said in its Short-Term Energy Outlook. Demand is expected to rise 270,00 bpd to 95.2 million barrels a day, up 0.3 percent from September’s forecast due in part to an outlook for stronger demand growth from China.

Russia’s energy minister said Russia and Saudi Arabia had discussed the oil market in a meeting last week and would continue to consult each other.

OPEC Secretary-General Abdullah al-Badri at a conference in London that OPEC and non-OPEC members should work together to reduce the global supply glut.

Iran’s crude sales were on track to hit 7-month lows as its main Asian customers bought less than before, countering expectations that oil supplies from the country would surge once nuclear-related sanctions are lifted.