Oil heads for best weekly gain as Russia-OPEC agree on framework to extend output cuts

Oil headed for its best weekly advance in a month after an outage on the Keystone pipeline added to speculation crude supply could tighten and as investors await OPEC’s decision on extending output curbs.

Futures gained as much as 1.2 percent in New York. News that TransCanada Corp. was said to have cut 85 percent of Keystone’s November shipments because of last week’s spill in South Dakota has helped West Texas Intermediate prices head toward a 3.5 percent gain this week.

Meanwhile, Brent crude has climbed just 1.3 percent, leading to the narrowest spread on a closing basis between the grades since early September.

The U.S. benchmark settled above $58 a barrel for the first time since mid-2015 this week on heightened optimism the Organization of Petroleum Exporting Countries and its allies will agree to prolong cuts at a Nov. 30 meeting in Vienna. Prices are up more than 7 percent in November, heading for a third monthly gain in what would be their longest winning streak since May last year.

According to Bloomberg, Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London, said “trading may have been subdued, but buying pressures remained at the fore due in large part to the ongoing U.S. pipeline woes.”

WTI for January delivery was at $58.55 a barrel on the New York Mercantile Exchange at 10:15 a.m. in London, up 52 cents. The contract added $1.19 to $58.02 on Wednesday. There was no settlement Thursday because of the Thanksgiving holiday in the U.S. and all transactions will be booked Friday.

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Brent for January settlement climbed 3 cents to $63.58 a barrel on the London-based ICE Futures Europe exchange. Prices rose 23 cents to $63.55 on Thursday. The global benchmark crude traded at a premium of $4.98 to WTI.

This week, the front-month contract for WTI on Nymex turned more expensive than the second-month contract, a structure known as backwardation, driven by the Nov. 16 shutdown of the Keystone pipeline after a spill.

Also aiding prices this week is data showing U.S. crude inventories declined to about 457.1 million in the week ended Nov. 17, according to the Energy Information Administration. Stockpiles at Cushing, Oklahoma, dropped by 1.83 million barrels to 61.2 million, the largest draw since July. Meanwhile, American production gained for a fifth week to 9.66 million barrels a day.