North American oil price tops $50 US

The price for benchmark North American crude oil topped $50 US per barrel on Thursday, the first time it has crossed that threshold since early June.

The November contract for light sweet crude finished the day at $50.44 US, up 61 cents from Wednesday’s close.

Oil has been inching higher since September 28, when OPEC announced it had agreed to a loose framework for a production cut.  The cartel’s members agreed to reduce output by about 700,000 barrels per day to a range between 32.5 million and 33 million barrels daily. Reuters said OPEC estimates its current output is around 33.24 million barrels each day, and it has not cut its output since 2008.

On Thursday, Reuters reported that Algerian Energy Minister Nouredine Bouterfa said OPEC could even decide at a November meeting in Vienna to cut production by another one per cent on top of the reduction agreed to in September if producers deem it necessary. 

“We will evaluate the market in Vienna by the end of November and if 700,000 barrels are not enough, we will go up,” Bouterfa is quoted as telling an Algerian television outlet. “Now that OPEC is unified and speaks in one voice everything is much easier and if we need to cut by one per cent, we will cut by one per cent.”

Oil rallied Wednesday following a data release from the U.S. Energy Information Administration that showed there was 499.7 million barrels of crude in storage. While high by historical standards, that figure is a drop of 3 million barrels from the previous week — a sign that the market is eating up some of the excess supply that has kept a lid on prices since 2014.

Benchmark West Texas Intermediate closed on June 20, 2014  at a near-nine-month high of $107.26 US per barrel as traders reacted to reports of a violent uprising in Iraq. However, that peak marked the end of a five-year price rally. World crude prices then began a collapse that would take them under $27 a barrel in January and February of this year.

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