Crude was up again this morning continuing the rally that began with OPEC’s “announcement” of production cuts (details in Vienna on November 30, maybe) at its meeting last week in Algiers. West Texas Intermediate sagged into the close, however.
West Texas Intermediate was up 2.46% to $49.89 a barrel as of 11:15 a.m. New York time today before finishing off 0.34%. The international Brent benchmark was ahead 2.26% to $52.02 at 11:15 and closed up 1.95%.
The impetus today came from a surprise reduction in U.S. crude inventories reported by the U.S. Energy Information Administration. Inventories for the week ended September 30, fell by 2.976 million barrels. Industry analysts had expected an increase in inventories of 2.56 million barrels. Gasoline inventories climbed by 0.222 million barrels but that was less than the 0.70 million barrel increase projected by analysts.
As you might expect, the extension of the rally today has started to prompt warnings that higher oil prices will cause an increase in supply that will send prices lower. Goldman Sachs, for example, warned today that oil at $55 a barrel would result in an increase in supply that would cap any rally.