Oil holds gains as Saudi prince backs Opec cuts
Brent oil held gains near the highest level in more than two years as Saudi Arabia’s Crown Prince Mohammed Salman backed the extension of Organisation of Petroleum Exporting Countries (Opec)-led output cuts.
Futures were little changed near US$60 a barrel in London, up 2.6% for the week. The prince said on Thursday that “of course” he wanted to prolong the curbs beyond the end of March 2018. Opec is considering an exit strategy to avoid flooding the market once the agreement finally expires, people familiar with the talks said this week. Total SA’s chief executive officer Patrick Pouyanne said the imbalance between crude supply and demand is finally dissipating.
Brent has gained as speculation mounts the Opec will agree at its Nov 30 meeting to extend cuts by its members and allied nations aimed at draining a global glut. Oil ministers from Saudi Arabia and Russia will meet on Nov 2 to discuss prolonging the deal, Russian Energy Minister Alexander Novak said on Tuesday. Stronger demand will help cut stockpiles this year for the first time since prices slumped in 2014, the International Energy Agency said earlier this month.
“Oil remains buoyed by the solid global growth backdrop and the bullish market mood,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd in Zurich.
Brent for December settlement was at US$59.26 a barrel on the London-based ICE Futures Europe exchange as of 10.20am in London. Prices rose 1.5% to US$59.30 on Thursday, the highest close since July 2015. The global benchmark traded at a premium of US$6.69 to West Texas Intermediate.
WTI for December delivery lost 2 US cents to US$52.62 a barrel on the New York Mercantile Exchange. Total volume traded was about 46% below the 100-day average. The contract gained 46 US cents to close at US$52.64 on Thursday, the highest since April. Prices are up 2.2% this week.
Prince Mohammed said in an interview with Bloomberg that prolonging the cuts would bring benefits for both Opec and nonOpec producers.
His comments, which follow Russian President Vladimir Putin’s provisional backing to an extension, signal that Riyadh and Moscow are ready to prolong their collaboration to reduce oil supply and lift energy prices. — Bloomberg