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Oil closes in on 4-month highs on Opec cuts, US stock draw
[NEW YORK] Oil prices rose to near four-month highs on Monday, supported by the prospect of extended Opec-led oil supply curbs and signs of inventory declines in US crude stockpiles.
Brent crude futures settled at US$67.54 a barrel, rising 38 cents, or 0.6 per cent. The international benchmark held near its 2019 peak of US$68.14 reached on Thursday.
US West Texas Intermediate crude settled at US$59.09 a barrel, adding 57 cents, or 1 per cent, after hitting a four-month high at US$59.23.
"We will leave open the likelihood of fresh Brent highs especially with Opec+ reaffirming their commitment to cut production further via the past weekend's ministerial session," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
The Organization of the Petroleum Exporting Countries and its allies, known as Opec+, met in Azerbaijan this weekend to monitor their crude supply reduction pact, where they said they would exceed commitments in the coming months.
The group also canceled their April meeting, meaning the producer group will not meet again until June.
Saudi Arabia on Sunday signaled producers may need to extend the 1.2 million barrels per day of curbs past June into the second half of 2019. The kingdom has in general been cutting more dramatically than some other nations, while Russia, the largest non-Opec member in the pact, is less enthused about continuing production cuts.
"As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market towards balance," said Saudi minister Khalid al-Falih.
Exports from Opec's biggest producer fell to 7.3 million bpd in January from 7.7 million bpd in December, official data showed.
Signs of falling crude inventory levels at the US storage hub in Cushing, Oklahoma also supported futures, market participants said.
Crude stockpiles at Cushing, the delivery point for WTI, fell 1.08 million barrels in the week to Friday, traders said, citing data from market intelligence firm Genscape.
Overall US crude inventories were forecast to have drawn down last week, the second consecutive weekly decline, a preliminary Reuters poll showed.
US oil output from seven major shale formations was expected to reach a record 8.6 million barrels per day (bpd) in April, up 85,000 bpd, which would be the smallest monthly increase since May 2018, the government forecast.