Oil Trades at $45.74/barrel on Possible Production Freeze

Oil prices, on Tuesday, September 20, rebounded from six-week lows, with U.S. crude rising as much as 1 percent, as the market reacted to the statement by the Organisation of Petroleum Exporting Countries, OPEC, that a possible production freeze agreement could last longer than expected, CNBC reports.

International benchmark Brent crude oil futures were trading down 21 cents at $45.74 per barrel, after dropping to $45.09, its weakest level since Aug. 11.

U.S. gasoline futures tumbled 4 percent after Colonial Pipeline said it expects to restart its main 1.3 million barrel per day gasoline line on Wednesday after being shut for more than a week to fix the biggest leak in nearly two decades.

The news encouraged traders to sell gasoline and buy back crude as fears of fuel shortages eased, Again Capital founding partner John Kilduff said.

The pending expiry after Tuesday’s settlement of WTI’s October delivery contract, the front-month for the U.S. crude benchmark, had also weighed in New York’s morning trade.

Oil prices initially fell on pessimism that the Organization of the Petroleum Exporting Countries and other major crude producers will reach an output freeze deal at Sept. 26-28 informal talks in Algeria. Saudi Arabia, Iran, Iraq, Nigeria and Libya, five of OPEC’s largest oil exporters, have all raised or been trying to hike output in recent months even while talking of a freeze.

Official data released late on Monday confirmed a rise in Saudi Arabian oil exports in July to 7.622 million bpd, up from 7.456 million bpd in June.

However, around midday, short-covering and fresh buying emerged from those fearing of a rally should OPEC announce a deal in Algeria.

OPEC Secretary-General Mohammed Barkindo said he expected the potential freeze deal between OPEC and other producers to freeze output to last one year, longer than previously thought.