Brent crude set for long­est rally ever on OPEC cut­backs

The Hindu Business Line - - COMMODITIES - BLOOMBERG

Oil rose for a 10th con­sec­u­tive day in Lon­don, head­ing for its long­est run of gains on record, as OPEC cut­backs reined in sup­ply while re­as­sur­ance from the Fed­eral Re­serve buoyed the out­look for de­mand.

Fu­tures re­turned to a bull mar­ket this week after re­cov­er­ing more than 20 per cent from the lows reached in De­cem­ber. Saudi Ara­bia gave as­sur­ances on Wed­nes­day that the pro­duc­tion cuts by OPEC and its part­ners that came into ef­fect this month will be deep enough to pre­vent any sur­plus.

Sen­ti­ment in the oil mar­ket has turned around this week, said Jens Naervig Ped­er­sen, se­nior an­a­lyst at Danske Bank A/S in Copen­hagen. The re­ver­sal is on the back of a com­bi­na­tion of OPEC+ pro­duc­tion cuts tak­ing ef­fect, a sta­bi­liza­tion in risk sen­ti­ment in eq­uity mar­kets and a weaker dol­lar. In ad­di­tion, the oil mar­ket will be mon­i­tor­ing trade talks, which seem to progress slowly.

Brent for March set­tle­ment rose 45 cents to $62.13 a bar­rel on the ICE Fu­tures Europe Ex­change in Lon­don. Its climbed 8.9 per cent this week after gain­ing 9.3 per cent, the most in two years, the pre­vi­ous week. Ten con­sec­u­tive daily gains would mark the long­est rally since the con­tract started trad­ing in 1988. The global bench­mark crude traded at a premium of $8.74 a bar­rel to West Texas In­ter­me­di­ate for the same month.

WTI for Fe­bru­ary de­liv­ery ad­vanced 52 cents to $53.11 a bar­rel on the New York Mer­can­tile Ex­change. The US crude has also ad­vanced for a 10th day, its long­est run of daily gains since 2010, and has added 11 per­cent this week, the most since De­cem­ber 2016.

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