NEW YORK Oil prices rose about 5 percent on Thursday after comments from the Saudi oil minister about possible action to stabilize prices triggered a round of buying and the International Energy Agency forecast crude markets would tighten in the second half of 2016.
Saudi Energy Minister Khalid al-Falih said OPEC members and nonmembers would discuss the market situation, including any action that may be required to stabilize prices, during an informal meeting on Sept. 26-28 in Algeria.
The comments by the minister of the world's top oil exporter triggered fund buying and some short covering, giving a boost to prices, traders and brokers said.
Both benchmarks soared more than 5 percent and Brent futures LCOc1 were up $1.89 at $45.94 a barrel by 12:43 p.m. EDT (1643 GMT) and U.S. crude CLc1 rose $1.76 to $43.47.
U.S. refined products futures, including gasoline RBc1 and distillates HOc1, jumped after Motiva Enterprises LLC's[MOTIV.UL] 235,000 barrel per day Convent, Louisiana, refinery was evacuated due to a fire around midday on Thursday.
Distillate futures rose to their highest level since July 21 after the news, touching a session high of $1.3934 a gallon.
Many traders remain skeptical of the outcome of the meeting, expecting a repeat of the Doha meeting in April when talks fell through after Saudi Arabia backed out, citing Iran's refusal to join in a so-called production freeze.
"The markets clearly are deriving support from both the IEA report and statements from the Saudi oil minister," said Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut.
"In a crude market that has seen a combined increase of 200,000 gross short speculative positions over just the past six weeks, any talk of a potential coordinated effort from producers, no matter how unlikely the prospect, will lead to short covering."
The IEA, which advises large developed economies on energy policy, forecast a healthy draw in global oil stocks in the next few months that would help ease a glut that has persisted since 2014 on the back of rising OPEC and non-OPEC supply.
"Oil's drop ... has put the 'glut' back into the headlines even though our balances show essentially no oversupply during the second half of the year," the Paris-based IEA said in its monthly report.
In further bullish news, market intelligence firm Genscape reported a draw of about 271,000 barrels at the Cushing, Oklahoma delivery hub for WTI futures in the week to Aug. 9, traders said.
Analysts at brokerage Bernstein said in a note they expect high inventories, especially of refined fuel, to spur further refinery run cuts in the next few months.
"This expected diminishing product inventory overhang will lead to a sustained tightening of oil market fundamentals and oil prices should be well above current levels," they said.
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Chizu Nomiyama and Matthew Lewis)
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First Published On : Aug 11, 2016 23:15 IST