New York: Oil traded near a one-month high as traders weighed the prospect of Opec (Organisation Of Petroleum Exporting Countries) prolonging production curbs against the group’s struggle thus far to drain bloated stockpiles.

Futures fluctuated in New York after rising 4.3 per cent the previous four sessions. Iraq backed an extension of output cuts into 2018, adding to growing support for the Saudi-Russian proposal.

Oil rose back above $50 a barrel at the end of last week as Saudi Arabia and non-Opec member Russia rallied support for a nine-month extension to the output-cut deal agreed by the Opec and its allies last year. Ministers will gather in Vienna on Thursday to decide on a renewal of cuts at a time when Nigeria and Libya are restoring output, Iraq plans new production projects and US drillers continue to add rigs.

“We’re on the cusp of a rollover of the Opec deal,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “We haven’t heard from Iran yet or how they plan to deal with Nigeria and Libya, which are coming back. If those two countries continue to recover they have the ability to make up for the cuts made elsewhere.”

Different opinions

Opec ministers believe that nine months of extra cuts would be enough to finally re-balance the market.

“We need to give the market some more time,” the United Arab Emirates Energy Minister Suhail Al Mazroui said on Tuesday on the sidelines of a conference in Abu Dhabi. The deal “has been working and I know it will work even better for the second half,” he said, before traveling to the Austrian capital.

Kuwaiti Oil Minister Issam Almarzooq said some countries still aren’t on board for a nine-month extension, but there’s a preliminary agreement on a six-month deal that will be reviewed in November.

“An extension of the supply deal seems to have become a formality,” said Norbert Ruecker, head of commodities research at Julius Baer Group Ltd. “Unlike the sharp bounce seen in late November when the supply deal was announced first, oil prices have only reacted modestly so far. The lukewarm reception to the news reveals that the belief in a successful Opec strategy is eroding.”