Oil prices rose around 2 percent 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. U.S. crude futures for December delivery had climbed 90 cents, or 2.1 percent, to $44.22 a barrel by 0340 GMT. They struck their lowest in nearly two months the session before. January Brent futures were up 81 cents, or 1.9 percent, at $45.24 per barrel.
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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).
“Crude oil prices stabilised after several days of continued falls,” Australian bank ANZ said in a note on Tuesday.
“Headlines around increasing OPEC production remained prevalent, although the focus switched to final diplomatic efforts from nations to agree to a production cut.”
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.