New York: Oil traded at a 16-month high as Opec invited non-members to Vienna 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. The Organisation of Petroleum Exporting Countries will meet producers from outside the group in Vienna on Saturday to discuss supply curbs, according to Opec Secretary General Mohammad Barkindo. The group has invited 14 non-members, which together pump about a fifth of the world’s oil, to the talks, he said.
Oil has climbed more than 15 per cent since Opec agreed last week to reduce output by 1.2 million barrels a day starting in 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 with the accord 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, D.C.
“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 U.S. output may rebound next year, it said.
West Texas Intermediate for January delivery rose as much as 74 cents to $52.42 a barrel on the New York Mercantile Exchange and was at $52.11 as of 1:35 pm London time, the highest since July 2015. The contract gained 1.2 per cent to $51.68 on Friday. Total volume traded Monday was 40 percent above the 100-day average. Prices rose 12 percent last week.
Brent for February settlement advanced 43 cents, or 0.8 per cent, to $54.89 a barrel on the London-based ICE Futures Europe exchange, trading at a $1.87 premium to WTI for the same month. The global benchmark contract increased 52 cents to $54.46 on Friday.
Of the largest non-Opec nations invited to the Austrian capital, Mexico and Kazakhstan have previously signaled an unwillingness to cut production, while Oman has pledged to match the group’s production cut. Opec’s new 32.5 million barrel-a-day production target is only slightly below the group’s estimate for demand for its crude next year, meaning wider cooperation is needed to make a significant dent in the record stockpile surplus that has built up during three years of oversupply.
