Oil ex­tends rally on prospects OPEC could act to counter low prices

The Pak Banker - - MARKETS/SPORTS -

Oil prices rose on Mon­day, ex­tend­ing a rally trig­gered last week by spec­u­la­tion that OPEC might agree to cut pro­duc­tion to re­duce a sup­ply glut that has pushed prices to the low­est in over a decade.

Brent crude fu­tures LCOc1, the global bench­mark, were up 33 cents at $33.69 a bar­rel at 1023 GMT. U.S. fu­tures CLc1 traded at $29.79 a bar­rel, up 35 cents on Fri­day's close. Trade is likely to be thin­ner than usual on Mon­day due to the U.S. Pres­i­dents Day hol­i­day.

"Some traders still think about the chances of an OPEC plus Rus­sia (pro­duc­tion) cut and close their short po­si­tions," said Frank Klumpp, oil an­a­lyst at Stuttgart-based Lan­des­bank BadenWuert­tem­berg.

The United Arab Emi­rates' en­ergy min­is­ter said the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries was will­ing to co­op­er­ate on an out­put cut, the Wall Street Jour­nal re­ported last week.

And Nige­ria's oil min­is­ter told Reuters the mood in­side OPEC was shift­ing to a grow­ing con­sen­sus that a de­ci­sion must be reached on how to prop up prices.

Non-OPEC mem­ber Rus­sia said on Mon­day it wanted to see im­proved re­la­tions be­tween Iran and Saudi Ara­bia at a time when joint ac­tion is needed to in­flu­ence global oil prices, ac­cord­ing to the RIA news agency.

"The fact that the mar­ket has re­acted so strongly cer­tainly in­di­cates that th­ese com­ments are be­ing taken se­ri­ously," said an­a­lysts at Frak­furt-based Com­merzbank.

How­ever, many an­a­lysts, in­clud­ing the In­ter­na­tional En­ergy Agency, are still scep­ti­cal OPEC will cut a deal with other pro­duc­ers to reign in bal­loon­ing out­put.

"We con­tinue to be­lieve that if prices were to be ar­ti­fi­cially sup­ported with pro­duc­tion cuts it would only give more ex­pen­sive forms of pro­duc­tion more room to breathe and would only solve the prob­lem in the short term," Phillip Fu­tures said in a note.

Iran is ex­port­ing 1.3 mil­lion bar­rels per day (bpd) of crude oil, and will be pump­ing 1.5 mil­lion bpd by the start of the next Ira­nian year on March 20, a vice-pres­i­dent was quoted as say­ing on Satur­day.

Iran will load 4 mil­lion bar­rels of crude oil on tankers des­tined for Europe in the com­ing 24 hours, a se­nior of­fi­cial was quoted as say­ing.

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