Brent prices jumped by $11 in the month of September marking the largest gain in three days since 1990, according to a market update.
The latest findings from KPMG showed volatility in the oil markets has persisted in August and mid-September brought on by China’s financial slump and its wider effect on the markets.
The price jump per barrel was influenced by speculation of an OPEC production cut.
The International Energy Agency (IEA) announced oil’s latest fall would reduce non-OPEC oil supply in 2016 by almost 0.5million barrels per day.
The estimate marks the biggest decline in more than two decades with US tight oil expected to take up 80% of the 0.5mb/d reduction.
KPMG’s report also shows the US oil rig count fell to 652, down from 940 a year ago.
Production from seven major shale regions in the US is expected to decline to 44.9billion cubic feet per day in September compared with the high witnessed earlier this year in May.
George Johnson, an executive advisor in oil and gas, for KPMG said: “The late-August price action demonstrates the challenging market conditions participants face as oil prices continue to
oscillate around US$45/b – particularly the many US upstream players with unhedged physical exposure – who will be feeling every bump in the road.
“However, despite these rapid price movements many E&P players will be reluctant to lock in forward production hedges with oil trading at these historically low levels.
Many will be hoping the US$11/b rally is a sign of things to come. Further rhetoric from OPEC on production cuts, or threats to US production could trigger another upside move, but for such a rally to be sustained over the longer term the demand-supply imbalance needs to be redressed.”