Oil prices edged higher today as the Organisation of the Petroleum Exporting Countries (Opec) confirmed the market was finally rebalancing and called on US shale oil producers to help efforts to reduce supply.
Global benchmark Brent crude futures were trading 0.47 per cent higher at $56.05 per barrel while US West Texas Intermediate (WTI) prices were up 0.34 per cent at $49.75 per barrel at the time of writing.
At a conference in New Delhi, Opec said there were "clear signs" the oil market was rebalancing after years of oversupply.
“The process of global destocking continues, both onshore and offshore, with positive developments in recent months showing not only a quickening of the process but a massive drainage of oil tanks across all regions,” Opec secretary general Mohammad Barkindo said.
Read more: Brent crude oil dips below $56 a barrel
Opec has been working to reduce the global oversupply with an agreement among its members and non-members including Russia to cut production by 1.8m barrels per day (bpd).
Saudi Arabia also supported prices further by announcing it will cut November oil shipments by 560,000 bpd.
The deal is set to end in March 2018, and while there have been talks about extending it, no agreement has yet been made.
In the short-term view, Hurricane Nate has also bolstered prices as some US production remains offline. According to the US Department of the Interior yesterday, 85 per cent of US Gulf of Mexico oil production, or 1.49m barrels a day, was offline, but disruptions are not expected to last long.
US output has jumped 10 per cent to more than 9.5m bpd since the start of the year as the shale boom boosted production.
Today, Barkindo also called on US shale producers to help cut the global supply glut.
“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo.