Oil held gains above $50 a barrel as OPEC and Russia said they were well on the way to clearing a global glut and urged producers to stay focused on curbing supply.
Futures slipped 0.3 percent in New York after climbing 1.5 percent last week. The OPEC-led group implemented more than 100 percent of its agreed cuts last month and bloated fuel stockpiles have been “massively drained,” OPEC Secretary-General Mohammad Barkindo said Friday in Vienna. Russia signaled it would be willing to extend supply curbs past the end of March if needed.
Oil has advanced this month as U.S. Gulf Coast refineries resume operations after Hurricane Harvey. Meanwhile, drillers in America have continued to reduce activity, with rigs targeting crude falling for a third straight week to the lowest since June, according to Baker Hughes Inc. Yet even as declining rigs and inventories support the price, an extension of the OPEC-led deal beyond March will be required to rebalance the global market, according to BP Plc.
The Organization of Petroleum Exporting Countries and its allies need “definitely to cut beyond the first quarter” to bring inventories back to historically normal levels, Janet Kong, Eastern Hemisphere chief executive officer of integrated supply and trading at BP, said in Singapore. With an extension of cuts, oil could reach $60 a barrel next year, “but it’s hard for me to see that prices will be sustainably higher,” she said.
West Texas Intermediate for November delivery was at $50.52 a barrel on the New York Mercantile Exchange, down 14 cents, at 10:07 a.m. London time. Total volume traded was about 46 percent below the 100-day average. Front-month prices rose 11 cents to $50.66 on Friday, climbing for a third session.
Brent for November settlement gained 19 cents to $57.05 a barrel on the London-based ICE Futures Europe exchange, a six-month high, after rising 2.2 percent last week. The global benchmark crude traded at a premium of $6.53 to WTI.
The outlook for the global oil market is improving and OPEC members will keep pressing onward until it balances, Barkindo said in a video message at a conference in Singapore on Monday. However, it’s not possible to say whether the deal will need to be extended until closer to expiry, Kuwait’s Oil Minister Issam Almarzooq said.
Report courtesy Bloomberg