Saudis' turnabout regarding output also boosts prices: File Image/PixaBay
The potential for destruction caused by Hurricane Delta, production outages in the North Sea, and possible supply cuts from Saudi Arabia were the factors that caused oil prices to rise sharply on Thursday - supported by a surprise show of confidence about the crude market from the Organization of the Petroleum Exporting Countries (OPEC).
Brent settled up $1.35, or 3.2 percent, to $43.34 per barrel, while West Texas Intermediate added $1.24 cents, or 3.1 percent, to $41.19, after a Dow Jones report stated that the Saudis are considering reversing course over OPEC's planned production increase early next year.
This, combined with North Sea production outages caused by a workers' strike, as well as the slowdowns Delta may cause (some experts think as much as 5 million barrels could be removed from the market), somewhat alleviated traders' fears of oversupply.
Michael Wirth, CEO, Chevron
Our dividend is secure
Meanwhile, the latest forecast from OPEC foresees oil use rising to 107.2 million barrels per day (bpd) in 2030 from 90.7 million bpd in 2020, less than earlier predictions but still a "relatively healthy" rate.
Although OPEC factored in lingering effects of government restrictions due to Covid, the cartel acknowledged its reduced forecasts also took into account the shift to electric cars.
As for OPEC's take on the current state of a market ravaged by Covid restrictions throughout 2020, Mohammad Barkindo, secretary general for the cartel, said on Thursday the worst was over for oil.
More positive news on Thursday illustrating the resiliency of oil's major players in the face of calamity was delivered by Michael Wirth, CEO of Chevron, who told CNBC that "We continue to have a very strong balance sheet, so our dividend is secure" - a sentiment shared by the options market.