MENU
 Registered users can save articles to their personal articles list. Login here or sign up here
 Registered users can save articles to their personal articles list. Login here or sign up here

Oil set for longest gain since 2012

As Saudis seen extending cut.

Oil advanced for an eighth day in London, the longest gain since 2012, on confidence Saudi Arabia will support an extension to OPEC-led output cuts just as stockpiles show signs of shrinking.

Brent futures rose 0.6 percent, after rising 6.4 percent in the previous seven sessions. Saudi Arabia is likely to back  prolonging the curbs into the second half of 2017 in an effort to boost prices, according to a person familiar with the kingdom’s internal discussions. Several other countries, including Kuwait, have also expressed public support for an extension. Industry data was said to show U.S. crude supplies fell last week and OPEC’s monthly report said international inventories dropped in February.

While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. In its monthly report on Wednesday, OPEC also boosted estimates for rival supplies as shale drillers emerge from the industry’s two-year slump.

“OPEC just has to have patience because the markets are rebalancing,” Abhishek Deshpande, chief energy analyst at Natixis SA in London, said in a Bloomberg television interview.

Brent for June settlement was 32 cents higher at $56.55 a barrel on the London-based ICE Futures Europe exchange as of 12:06 p.m. local time. Prices increased 25 cents, or 0.5 percent, to $56.23 on Tuesday. The global benchmark crude traded at a premium of $2.51 to June WTI.

Saudi decision
West Texas Intermediate for May delivery was at $53.65 a barrel on the New York Mercantile Exchange, up 25 cents. Total volume traded was about 18 percent below the 100-day average. Front-month prices rose 32 cents to $53.40 on Tuesday, the highest close since March 1.

Saudi Arabia will decide on an extension depending on the stance of other OPEC nations such as Iraq and Iran, as well as Russia, which isn’t a member of the group but joined the output cuts, the person familiar with the kingdom’s internal discussions said. The world’s biggest crude exporter hasn’t made a final decision yet.

The kingdom — OPEC’s largest producer — reduced supply below 10 million barrels a day in March, more than pledged under the deal, according to the group’s monthly report. The group is scheduled to gather in Vienna on May 25.

U.S. crude supplies fell by 1.3 million barrels last week, the American Petroleum Institute was said to report. Stockpiles probably dropped from a record high by 1.5 million barrels to 534 million barrels in the week ended April 7, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Nationwide inventories have expanded by about 56 million barrels since the start of this year.

Oil-market news:

Compliance among the 11 OPEC members bound by the deal rose to 104 percent in March, as the United Arab Emirates moved closer to its ceiling, Venezuela delivered its full promised reduction, according to the group’s monthly report.

Oil prices of $60/bbl over the next three years and $70-$80 next decade will be roughly enough to balance the market, Ibrahim al-Muhanna, a former senior adviser to Saudi oil minister and now an independent consultant, says in prepared speech remarks.

Volume in WTI call options, which give the holder the right to buy crude in the future at a set price, surged on Tuesday to the highest since March. More than 61,000 contracts of July WTI crude $57 call options traded as of 5:19 p.m. in New York, a record high for the contract.
 
© 2017 Bloomberg L.P

More stories from Moneyweb
Reece Morrison

Reece Morrison

Masthead Financial Planning
Moneyweb Click an Advisor
   No comments so far

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up here

Latest Currencies

ZAR / USD
ZAR / GBP
ZAR / Euro

MARKET INDICATORS

JSE ALSI
Hang Seng
Nikkei
Dow Jones (close only)
S&P 500 (close only)
Gold / oz
Silver
Platinum / oz
Brent
Rand/Dollar
Rand/Pound
Rand/Euro
Dollar/Euro

MONEYWEB NEWSLETTERS

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Podcasts

Moneyweb Investor Issue 25

If the world's best investment managers, who came together at a recent CFA conference, cannot figure whether a crash or correction is looming, ordinary investors can be forgiven for their hesitation. Thus the June issue of The Moneyweb Investor does its best to fill the gaps. With 17 stories and a podcast, you wouldn't want to miss it.

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2