Oil Caps Longest Winning Streak Since August Ahead of OPEC CutsBy
Prices to recover further as curbs spur re-balancing: Al-Falih
OPEC and others to trim about 1.8 million b/d next year
Oil climbed in New York, capping the longest winning run in more than four months amid optimism that output cuts by major producers will help eliminate a supply glut.
Futures advanced 1.7 percent in New York, rising for a seventh session to the highest close in more than 17 months. Prices are set to recover next year as production cuts help to re-balance an oversupplied market, Saudi Arabia’s Energy Minister Khalid Al-Falih said last week. OPEC and 11 nations from outside of the group, including Russia, have agreed to trim about 1.8 million barrels a day next year. As inventories return to equilibrium, Brent prices should stabilize between $60-$70 a barrel, Venezuela Oil Minister Eulogio Del Pino said.
Oil has traded near or above $50 a barrel since the Organization of Petroleum Exporting Countries agreed last month to curb production for the first time in eight years. Iraq, the second-biggest OPEC producer, is fully committed to the accord, Oil Minister Jabbar Al-Luaibi said Thursday in Cairo at a meeting of the Organization of Arab Petroleum Exporting Countries. OPEC and its partners have established a committee to monitor the cuts and ensure producers abide by their pledges, OPEC Secretary-General Mohammad Barkindo said.
“A lot of these headlines will push around prices,” Michael Loewen, commodities strategist at Scotiabank in Toronto, said by telephone. “It seems like OPEC and non-OPEC are committed to this right now. There’s some hopefulness in the market.”
West Texas Intermediate for February delivery rose 88 cents to settle at $53.90 a barrel on the New York Mercantile Exchange, the highest level since July 2, 2015. There was no trading Monday because of the Christmas holiday. Total volume traded was about 61 percent below the 100-day average. Prices are up about 45 percent this year.
Brent for February settlement climbed 93 cents to end the session at $56.09 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a premium of $2.19 to WTI.
“A lot of the strength in the market is mostly a result of the optimism that the production cuts will go through starting in the new year,” Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone. Still, there is uncertainty about whether U.S. shale production will negate a large part of the cuts, he said.
U.S. drillers added rigs for an eighth straight week, Baker Hughes Inc. reported on Friday. The U.S. oil rig count rose by 13 to 523 last week, the highest level since January.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, likely rose by 500,000 barrels last week, according to a forecast compiled by Bloomberg. U.S. crude stockpiles probably fell by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report later this week.
- The Kurdistan Regional Government in northern Iraq hasn’t shown willingness to join accord reached by OPEC members to cut output, Rudaw news agency reports.
- Vessel Minerva Georgia is set to arrive at Libya’s Es Sider port Thursday to load 630,000 barrels of crude.
- The U.S. Oil Fund is poised for about a $497 million outflow this year, the largest yearly withdrawal since 2013. While WTI crude futures gained about 45 percent this year, the fund was only up about 6 percent.
— With assistance by Heesu Lee, Sam Wilkin, and Ben Sharples