LONDON, Sept 22 (Reuters) Oil prices rose for a second day on Friday, after a brief mid-week dip below a barrel, as investors bet that a six-week slump driven by rising U.S. inventories and easing Iran tensions could be coming to an end.
U.S. light crude for November delivery rose 28 cents to .87 by 1347 GMT, adding to a 85-cent gain on Thursday. London Brent crude jumped 30 cents to .64.
The tumble of more than 20 percent since early August has raised expectations that OPEC, which decided two weeks ago to maintain production for the time being, will formally curb output to limit further losses.
Preliminary data from tanker tracker Petrologistics showed OPEC pumped 400,000 barrels per day less crude so far in September, compared with the whole of August, on lower production from the group's top two producers, Saudi Arabia and Iran.
Oil has lost about over the past six weeks, but the exodus of investment funds, which has deepened losses, may end soon given the approach of winter demand and the potential for OPEC cuts.
''We think prices have got potential to stabilise and consolidate. Stocks are high but we are also going into winter.
Geopolitical tensions are easing, but they are as easy as they are going to be,'' said Michael Coleman, a partner with Singapore-based hedge fund Aisling Analytics.
But other analysts predicted that market sentiment had turned negative and prices will continue to fall.
''Despite the gains, volume in both crude contracts was so light that we have our doubts about the sustainability of this rally, and would suggest that it was merely an interruption of the broader downward trend,'' said Edward Meir of Man Financial.
Rising fuel inventories in the United States have fed increasingly bearish sentiment ahead of winter.
Distillates stocks, which include heating oil, stand at their highest level since January 1999, while crude inventories are also in their upper range for this time of the year.
Domestic gas inventories also stand at record-high levels for this stage in the year.
Further easing supply risks, Iranian President Mahmoud Ahmadinejad said on Thursday his country was prepared to negotiate a suspension of its most sensitive nuclear work if it received fair guarantees in talks with major powers.
REUTERS PKS BD1938
U.S. light crude for November delivery rose 28 cents to .87 by 1347 GMT, adding to a 85-cent gain on Thursday. London Brent crude jumped 30 cents to .64.
The tumble of more than 20 percent since early August has raised expectations that OPEC, which decided two weeks ago to maintain production for the time being, will formally curb output to limit further losses.
Preliminary data from tanker tracker Petrologistics showed OPEC pumped 400,000 barrels per day less crude so far in September, compared with the whole of August, on lower production from the group's top two producers, Saudi Arabia and Iran.
Oil has lost about over the past six weeks, but the exodus of investment funds, which has deepened losses, may end soon given the approach of winter demand and the potential for OPEC cuts.
''We think prices have got potential to stabilise and consolidate. Stocks are high but we are also going into winter.
Geopolitical tensions are easing, but they are as easy as they are going to be,'' said Michael Coleman, a partner with Singapore-based hedge fund Aisling Analytics.
But other analysts predicted that market sentiment had turned negative and prices will continue to fall.
''Despite the gains, volume in both crude contracts was so light that we have our doubts about the sustainability of this rally, and would suggest that it was merely an interruption of the broader downward trend,'' said Edward Meir of Man Financial.
Rising fuel inventories in the United States have fed increasingly bearish sentiment ahead of winter.
Distillates stocks, which include heating oil, stand at their highest level since January 1999, while crude inventories are also in their upper range for this time of the year.
Domestic gas inventories also stand at record-high levels for this stage in the year.
Further easing supply risks, Iranian President Mahmoud Ahmadinejad said on Thursday his country was prepared to negotiate a suspension of its most sensitive nuclear work if it received fair guarantees in talks with major powers.
REUTERS PKS BD1938
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