NEW YORK (CNBC) - Benchmark Brent oil climbed above $100 a barrel on Wednesday after Saudi Arabia suggested this week that OPEC could consider cutting output in response to poor liquidity in the crude futures market and fears about a global economic downturn.
Brent for October settlement reached a three-week high and was last up 92 cents at $101.14 per barrel. U.S. crude added 79 cents to trade at $94.53 a barrel.
Contracts for both crudes soared after Energy Minister Prince Abdulaziz bin Salman flagged the possibility of cutting production amid poor futures market liquidity and macro-economic fears.
OPEC sources later told Reuters any cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, were likely to coincide with a return of Iranian the market should Tehran secure a nuclear deal with world powers.
OPEC+ is already producing 2.9 million barrels per day less than its target, sources said, complicating any decision on cuts or how to calculate the baseline for an output reduction.
“The oil price and supply outlook suggest that an OPEC+ cut is not currently warranted,” PVM analyst Stephen Brennock said, outlining possible threats to supply underpinning the market.
“Global oil supply could take a hit as peak U.S. hurricane season approaches,” he said. “Elsewhere, future supply outages in Libya cannot be discounted while Nigeria’s oil fortunes show little sign of improving.”
U.S. crude stockpiles fell by about 5.6 million barrels for the week ended Aug. 19, according to market sources citing American Petroleum Institute figures. Analysts had estimated a drop by 900,000 barrels in a Reuters poll.
U.S. government figures are due out on Wednesday.
Market participants will be watching Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole central bank symposium on Friday. He is expected to stress the Fed’s focus on controlling inflation.