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Oil advances to 16-month high as focus shifts to non-Opec cuts
[LONDON] Oil traded at a 16-month high as Opec prepared to meet non-members in an effort to secure additional output cuts following last week's surprise deal to curtail supply.
Futures rose as much as 1.4 per cent in New York. Organization of Petroleum Exporting Countries's members will meet producers from outside the group in Vienna on Saturday to discuss the supply curbs, according to Opec Secretary General Mohammad Barkindo.
In the US, drillers added rigs for a fifth week to reach the highest level since January, data from Baker Hughes Inc showed.
Oil has climbed more than 15 per cent since Opec agreed Wednesday to reduce output by 1.2 million barrels a day from January, while non-member Russia pledged a cut of as much as 300,000 barrels a day.
Attention is now shifting to Opec's compliance and efforts to persuade other producers to cooperate. The deal can balance the market, but "we tend to cheat," former Saudi Arabian Oil Minister Ali Al Naimi said at an event in Washington DC.
"There is a reasonable degree of clarity as to how individual Opec members will respond to the group's recent decision," JBC Energy GmbH said in a note.
"The same cannot be said about Russia, let alone other non-Opec producers" such as Oman, while US output may rebound next year, it said.
West Texas Intermediate for January delivery rose as much as 74 US cents to US$52.42 a barrel on the New York Mercantile Exchange and was at US$52.16 as of 11.33am London time, the highest since July 2015.
The contract gained 1.2 per cent to US$51.68 on Friday. Total volume traded Monday was 51 per cent above the 100-day average. Prices rose 12 per cent last week.
Brent for February settlement advanced 59 US cents, or 1.1 per cent, to US$55.05 a barrel on the London-based ICE Futures Europe exchange, trading at a US$1.93 premium to WTI for the same month. The global benchmark contract increased 52 US cents to US$54.46 on Friday.
U.S. drillers increased the rig count by three to 477 last week, according to data from Baker Hughes on Friday. Companies have now added 161 rigs nationwide since an expansion started at the end of May.
Brazil's government has not yet decided on proposed oil output cut by non-Opec nations, with discussions ongoing, Minister of Mines & Energy Fernando Coelho Filho says at PetroTech conference in New Delhi.
Indian oil-demand growth may weaken as the government's cash crackdown slows the economy, according to Ivy Global Energy Pte, FGE and Centrum Broking Ltd.
Nigeria will maintain output at 1.9 million barrels a day, Emmanuel Ibe Kachikwu, the nation's minister of state for petroleum, said in New Delhi.