Oil prices rose on Thursday, with Brent topping $50 a barrel for the first time in six weeks, as traders continued to talk up the potential for an output cut agreement at a meeting of OPEC and non-OPEC producers next month.
Brent crude oil futures were trading at $49.93 per barrel at 0750 GMT, up 8 cents, after earlier rising as high as $50.05 a barrel.
West Texas Intermediate (WTI) crude futures were trading at $47.10 a barrel, up 31 cents.
The strength of WTI on Thursday was also a result of a flood of new orders to ship U.S. crude to Europe to take advantage of arbitrage opportunities resulting from a wide spread between the U.S. and European benchmarks.
Brent prices continued to rise despite Saudi Arabia sending signals that it could boost its crude oil supplies in August to a new record, even as it gets ready for tough talks next month for a global output freeze.
“We remain sceptical that renewed talks of a production freeze by OPEC and other large producers will lead to a deal. Prices are only marginally above where they were when the group met in Doha in April and couldn’t agree to a deal,” Australian bank ANZ said.
The opening of the arbitrage between the United States and Europe could help to draw down U.S. crude inventories further.
The unexpected fall in U.S. crude inventories last week has already helped to support prices, with gasoline stocks also decreasing more than expected, data from the Energy Information Administration showed on Wednesday.
Prices remain more than 20 percent higher than a six-week low hit earlier in August, supported by the potential freeze or even cut in output following next month’s meeting in Algeria between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russia.
Analysts at Citi also warned of the risks of a price rally based largely on potential future talks, given that similar meetings failed to reap results earlier this year.
“OPEC cooperation hopes should be treated with caution, as this is shaky ground to base a bull rally on,” the U.S. bank said.