Oil capped the biggest three-day gain in 25 years after OPEC said it’s ready to talk to other global producers to achieve ‘fair prices’ and the U.S. government reduced its crude output estimates.
West Texas Intermediate for October delivery surged $3.98, or 8.8 percent, to close at $49.20 a barrel on the New York Mercantile Exchange. It was the highest settlement since July 21.
Crude prices in New York have surged 27 percent in three days, the most since August 1990 when Iraq invaded Kuwait. The contract has climbed more than 20 percent from its closing low on Aug. 24, meeting the common definition of a bull market. The Organization of Petroleum Exporting Countries, responsible for about 40 percent of the world’s supply, said in a monthly publication it’s willing to talk, “but this has to be on a level playing field.”
The price gains erased last week’s drop to a six-year low as the OPEC comments and signs that the U.S. shale boom is fading faster provided optimism that a global supply glut will evaporate sooner than estimated. A measure of oil-price fluctuations rose to a five-month high as traders sought protection from market swings.
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“The market turned around on two pieces of news,” said Phil Flynn, senior market analyst for Price Futures Group in Chicago. “The EIA cut its U.S. output estimates and OPEC says it’s ready to talk to others about cutting output.”