Oil set for biggest third quarter gain in 13 years

> Prices rise after Iraq says major producers mulling extending or deepening supply cuts

LONDON: Oil headed for its largest third-quarter gain in 13 years as prices rose yesterday after the Iraqi oil minister said Opec and its partners are considering extending or deepening output cuts aimed at reducing a global supply glut.

Brent crude futures rose 64 cents to US$55.78 (RM234) a barrel by 1330 GMT, while US West Texas Intermediate (WTI) crude futures gained 52 cents to US$50.00. The oil price is on course for a rise of nearly 16% this quarter, which would make this year’s performance the strongest for the third quarter since 2004.

“With oil prices steadily appreciating, as investors become increasingly optimistic over Opec’s effort to stabilise the saturated markets, the cartel should be encouraged to extend the current deal, which may fuel the upside,” FXTM analyst Lukman Otunuga said.

The Organisation of Petroleum Exporting Countries and other producers are considering a range of options, including an extension of cuts, but it is premature to decide on what to do beyond the agreement’s expiry in March, Iraqi oil minister Jabar al-Luaibi told an energy conference on Tuesday.

Opec and non-Opec producers including Russia have agreed to reduce output by about 1.8 million barrels per day until March to reduce global oil inventories and support prices.

Some producers think the pact should be extended for three or four months, others want it to run until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.

Analysts, however, doubt that such an extension would have much of an impact on the overall oil market.

“I can’t see the market tightening unless Opec cuts output further next year,” said Commerzbank strategist Carsten Fritsch. – Reuters