Oil pares losses on talk of Opec curbs

Speculation is swirling over group’s output strategy before it meets partners in December

Oil rose, paring sixth weekly loss, amid growing confidence that Opec and its partners will reduce production to avert a glut next year.

Futures in New York rose 1.8 per cent yesterday, trimming the weekly drop to 4.6 per cent. With the Organisation of Petroleum Exporting Countries seeing waning demand for its oil, the group and its allies are said to be considering bigger-than-expected cuts despite criticism from President Donald Trump. In the US, government data showed stockpiles climbed the most in 21 months last week.

Oil is in a bear market after plunging from a fouryear high in October as the US granted surprise waivers allowing some Iranian oil flows to continue even after sanctions took effect. Meanwhile, the demand outlook remains uncertain amid trade tensions between the US and China, and speculation is swirling over Opec’s output strategy before it meets partners in Vienna in December.

Brent for January settlement rose $1.22 to $67.84 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 3.3 per cent last week. The global benchmark crude traded at a a $10.17 premium to WTI for the same month.

West Texas Intermediate for December delivery traded up $1 at $57.46 a barrel on the New York Mercantile Exchange at 11:50am London time, after advancing 21 cents on Thursday. Total volume traded was about 23 per cent above the 100-day average.

“It looks likely that Opec will cut production again after all,” said Eugen Weinberg, head of commodities research at Commerzbank. “But creating an artificial supply squeeze won’t work in the long term, as they will need to keep cutting each year to keep prices high.”

As oil was mired in a record 12-day losing streak earlier this month, Saudi Arabia proposed an Opec output cut of 1 million barrels a day, a U-turn from a June decision to boost supply.