Oil rebounds on Opec signals

Futures in New York climbed 0.5% as group hints at extending output cut deal

Oil rebounded from the biggest loss in more than a week as Opec hinting at extending output cuts fanned optimism and investors anticipated a drop in US stockpiles.

Futures in New York climbed 0.5 per cent after losing 1.7 per cent on Monday. Kuwait said the Organisation of Petroleum Exporting Countries and allied producers will discuss extending an agreement to cut oil output into 2019. Adding to optimism, analysts forecast US crude inventories probably fell last week after holding below the five-year average the previous four weeks.

Oil surged to a three-year high last week after geopolitical risks such as the conflict in Syria and tensions between Saudi Arabia and Iran-backed rebels in Yemen raised concerns over potential supply disruptions. Record US crude production remains a major worry for Opec and its allies who have been battling to reduce a global glut via supply reductions for the last 15 months.

“Opec and its allies are expected to control their supplies at levels that meet demand even after crude inventories decline,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd, said by phone from Tokyo. Anticipation Opec will continue to manage supply as well as “declining US crude inventories should support oil prices.”

West Texas Intermediate for May delivery climbed as much as 42 cents to $66.64 a barrel on the New York Mercantile Exchange, and traded at $66.57 at 3:42pm in Tokyo. The contract fell $1.17 to close at $66.22 on Monday. Total volume traded was about 19 per cent below the 100-day average.

Brent for June settlement added 32 cents to $71.74 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.20 premium to June WTI.

$5.20

Brent crude’s premium to June WTI prices