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Oil hits six-week high on hopes of Opec extending output cuts
OIL futures hit a six-week high on Tuesday, rising for a fifth day on optimism that the Organization of the Petroleum Exporting Countries (Opec) and other countries may agree to extend production cuts in a bid to support prices.
Brent was up 26 US cents, or 0.4 per cent, at US$62.85 a barrel by 0349 GMT, while US crude was 27 US cents, or 0.5 per cent, higher at US$58.12 a barrel. Brent touched its highest since Aug 1, while US crude rose to the highest since July 31.
US oil gained more than 2 per cent on Monday, while Brent finished the day 1.7 per cent higher as the market reacted to news that Saudi Arabia's king had appointed his son, Prince Abdulaziz bin Salman, as energy minister on Sunday.
Prince Abdulaziz, a long-time member of the Saudi delegation to Opec, said that the pillars of Saudi Arabia's policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained.
He added that the so-called Opec+ alliance, made up of Opec and non-Opec countries including Russia, would be in place for the long term.
A meeting of Opec and Opec+ countries in Abu Dhabi this week "is stirring up hopes for additional supply cuts", said Stephen Innes, Asia-Pacific market strategist at AxiTrader.
Still, Russia's oil output in August exceeded its quota under the Opec+ agreements.
"Markets will need to see concrete progress on the production front, even as the world's economy slows, to sustain gains," said Jeffrey Halley, senior market analyst at Oanda.
Should oil end Tuesday higher, it will be the longest run of gains since late July but headwinds remain as the US-China trade war rumbles on.
Executives at the annual Asia-Pacific Petroleum Conference said on Monday that they expect oil prices this year to be pressured by uncertainties surrounding the global economy, the US-China trade war and increasing US supplies.
In the United States, crude stockpiles are likely to have fallen for a fourth consecutive week last week, a preliminary Reuters poll showed on Monday.
Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels in the week to Sept 6. REUTERS