United States crude posts 5.1% weekly gain to settle at $49.89

Why oil markets could see some volatile trading this week

The increase was the first in four weeks.Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to September 12, the U.S. Commodity Futures Trading Commission reported on Friday. Propane stocks decreased by 1.4 million barrels.

Futures jumped 1.9 per cent in NY.

OPEC and producers, including Russian Federation, have agreed to reduce output by about 1.8 million barrels per day until March 2018 to reduce global oil inventories and support prices. Some U.S. refiners are delaying maintenance to take advantage of strong margins.

Oil rose on Wednesday, set for its largest third-quarter gain since 2004, after the Iraqi oil minister said OPEC and its partners were considering extending or deepening supply cuts to erode an existing global surplus.

He said some participants want a three or four months extension, while some think the deal needs to be extended until the end of next year. Iraq, the group's second-biggest producer, has said production should be reduced by an additional 1 percent to help rebalance the market.

The US benchmark West Texas Intermediate for October delivery, which expired Wednesday (Thursday AEST), rose 93 cents to settle at $US50.41 a barrel on the New York Mercantile Exchange.

Georgi Slavov, the head of research at commodities brokerage Marex Spectron, said he did not expect demand for crude oil to rise significantly in the final quarter of this year, which meant supply would have to be restricted even more tightly. The more-active November futures climbed 60 cents to $50.50 at 12:07 p.m. London time.

Brent crude futures, the worldwide benchmark for oil prices, were at $55.50 per barrel at 0653 GMT, up 2 cents from their last close.

But last week, the International Energy Agency said oil stockpiles in developed countries could hit or fall below their five-year average "very soon," a key target for OPEC as it considers extending the output cuts.

The API report also showed that gasoline inventories dropped 5.1 million barrels, and distillate inventories declined by 6.1 million barrels.

Global crude oil prices slipped slightly Monday but stayed close to multimonth highs as traders braced for a potential stockpile build, expected later this week.

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