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November 10, 2015 8:10 AM, EST

Crude Oil Rises From Two-Week Low as Market Appears to Tighten

Brittany Sowacke/Bloomberg News

Oil climbed from a two-week low amid speculation that the buildup of U.S. crude inventories will soon end as refinery demand increases.

Futures rose as much as 2% in New York on Nov 9. U.S. stockpiles probably increased by 1.3 million barrels last week, the smallest gain since September, according to analysts surveyed by Bloomberg News.

The Energy Information Administration said Nov. 9 that shale volumes in the nation will shrink by 118,000 a barrels a day in December.

Supply from the United States and other non-OPEC countries will probably stop growing by 2020, the International Energy Agency said Nov. 10 in a report.

"We hit the bottom of the recent range and bounced back," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. "Stock builds are expected at this time of year, but that should end in the next couple weeks. We’re also seeing problems in the shale patch, which is also supportive."

The oil market has experienced a slump of 43% in the past year amid a global glut. U.S. stockpiles remain more than 100 million barrels above the five-year seasonal average after producers cut costs to maintain output.

The Organization of Petroleum Exporting Countries is considering raising its official production target to take into account new member Indonesia, according to two OPEC delegates.

Crude output at major shale plays across the U.S. will fall to about 4.95 million barrels a day next month, the Energy Information Administration said in its monthly drilling report Nov. 9.

OPEC’s share of global crude supply will remain steady at 41% until the end of the decade, then rise to 44% by 2025, two percentage points higher than the IEA forecast a year ago. Production growth from countries not part of the group will slow over the next five years and halt by 2020.

"The IEA report was bullish in that it saw an eventual recovery in price and a greater need for OPEC supply," Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. "The market will tighten by 2020. That’s an awful long time to wait for $80 oil if you’re a trader."

Indonesia’s re-entry to OPEC after a break of almost seven years comes at a time when the group has abandoned its traditional role of supporting prices as it seeks to defend market share.