Oil Rises to Highest in More Than Year Amid Output Deal OptimismBy
Saudi energy minister says other producers ready to cooperate
Russian minister says ready for deal with OPEC on production
Oil closed at the highest level in more than a year as Saudi Arabia expressed optimism that OPEC will work out a deal with other producers and Russia said it would back an accord.
Futures climbed 3.1 percent in New York. Many other producers have expressed their readiness to work with the Organization of Petroleum Exporting Countries, Saudi Minister of Energy and Industry Khalid Al-Falih said in Istanbul, where he’s attending the World Energy Congress. He will meet in the next couple of days with his Russian counterpart, who said on Monday his country is ready for an accord with OPEC after the group’s members agree on quotas.
"This is a headline-driven situation, and will remain so as long as everyone is in Istanbul," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "It was the Saudi statement that got us in positive territory and the Russian comments have added to the market’s strength."
Oil has gained about 10 percent since OPEC provisionally agreed last month to cut production for the first time in eight years. The group’s members will meet this week in Istanbul for talks on implementing the deal and Al-Falih said it’s not unthinkable prices will rise to $60 a barrel by the end of this year. In the U.S., output halted its drop to the lowest in more than two years as higher prices bring back drilling activity.
West Texas Intermediate oil for November delivery rose $1.54 to $51.35 a barrel on the New York Mercantile Exchange. It was the highest close since July 15, 2015. Total volume traded was 42 percent above the 100-day average.
Brent for December settlement increased $1.21, or 2.3 percent, to $53.14 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since Aug. 31, 2015. The global benchmark crude closed at a $1.27 premium to WTI for the same month.
Energy shares led the Standard & Poor’s 500 Index higher, as the equity benchmark extended its record for a fourth day. The S&P Oil & Gas Exploration and Production Select Industry index was up 2 percent at 2:48 p.m.
Russia is ready in principle to consider OPEC proposals, including the possibility of cuts, Energy Minister Alexander Novak said in Istanbul. It still prefers a production freeze and wants to maintain its current output level. Russian President Vladimir Putin said he hoped OPEC would agree on limits to its crude production in November and that his country was ready to support that decision.
"There’s a lot of enthusiasm about the potential for an agreement between OPEC and non-OPEC producers," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "The market is getting ahead of the reality of the situation."
Diesel futures for November delivery rose 2 percent to $1.6102 a gallon in New York, the highest close since Oct. 6, 2015. November gasoline climbed 1 percent to settle at $1.4972.
- Money managers increased long positions in WTI futures and options to the highest level in more than two years during the week ended Oct. 4, according to the Commodity Futures Trading Commission. Bets on falling prices dropped for a second week.
- In the Brent market, money managers boosted bullish bets by 11 percent to 422,500 during the week, according to data from ICE Futures Europe. The combined length of WTI and Brent rose to a record.
- Oil prices may reach $55 to $60 by year-end on OPEC talks, BP Plc Chief Executive Officer Bob Dudley said in Istanbul. The company still sees an average 2017 oil price of $55.
- A 2017 WTI price forecast of $59 a barrel means U.S. shale oil production should hit bottom in the first quarter of next year, Bank of America Merrill Lynch analysts said in a report.
— With assistance by Rakteem Katakey