Opec-Russia talks to focus on cuts

Oil extend gains, lifted by decline in US crude inventories and risk of supply disruptions

The Organisation of Petroleum Exporting Countries (Opec) and Russia will meet in Saudi Arabia this week after all but banishing a global oil glut. While looming political crises threaten to tighten supplies further, the group seems determined to keep its cuts in place.

Almost 16 months of output curbs by the Opec and its partners have seen crude rally to a three-year high near $70 (Dh256) a barrel. That’s replenishing their coffers after the worst oil slump in a generation, encouraging the producers to extend their intervention even as Venezuela’s petro-economy implodes and Donald Trump threatens Iran with sanctions.

Oil prices extended gains yesterday, lifted by a reported decline in US crude inventories and the risk of supply disruptions.

Brent crude oil futures rose 87 cents to $72.45 a barrel by 1143 GMT, while US WTI crude futures rose 95 cents to $67.47.

“Yesterday evening saw the API report a surprising decrease in US crude oil stocks and a reduction in oil product stocks that was sharper than anticipated,” Commerzbank oil analyst Carsten Fritsch said in a note.

US crude inventories fell by 1 million barrels last week to 428 million barrels, the American Petroleum Institute (API) said.

“Would they declare victory now and stop? No way,” said Mike Wittner, head of oil market research at Societe Generale SA. “They’re happy to see inventories continue to go down, to see prices of $70 or $80. In the end, it’s about revenues. The question is at what point do they become uncomfortable with higher prices?”

While analysts warn that price gains could backfire on Opec by spurring rival US supplies or crimping demand, ministers gathering in Jeddah tomorrow will focus on ways of prolonging their cooperation.