LONDON: Oil advanced to a fresh two-year high as Opec and Russia were said to have crafted the outline of a deal to extend their oil production cuts to the end of next year.
Futures gained as much as 1.5 per cent in New York. After days of talks, Moscow and Riyadh now agree on the need to announce an additional period of cuts at the Nov. 30 meeting, although both sides are still hammering out crucial details, according to people involved in the conversations.
The US benchmark settled above $58 (Dh213) a barrel for the first time since mid-2015 this week on heightened optimism the Organisation of Petroleum Exporting Countries and its allies will agree to prolong cuts at a Nov. 30 meeting in Vienna. Prices are up more than 8 per cent in November, heading for a third monthly gain in what would be their longest winning streak since May last year.
“Hopes are high for the Opec meeting,” said Bob Minter, investment strategist at Aberdeen Asset Management Inc. “Opec will surely extend the program of cuts — it’s hard to imagine that they’d let markets get this far ahead of themselves without any basis.”
WTI for January delivery was at $58.87 a barrel on the New York Mercantile Exchange at 12:26pm in London, up 85 cents. The contract added $1.19 to $58.02 on Wednesday. There was no settlement Thursday because of the Thanksgiving holiday in the US and all transactions will be booked Friday.
Brent for January settlement climbed 23 cents to $63.78 a barrel on the London-based ICE Futures Europe exchange. Prices rose 23 cents to $63.55 on Thursday. The global benchmark crude traded at a premium of $4.94 to WTI.
This week, the front-month contract for WTI on Nymex turned more expensive than the second-month contract, a structure known as backwardation, driven by the Nov. 16 shutdown of the Keystone pipeline after a spill.
Also aiding prices this week is data showing US crude inventories declined to about 457.1 million in the week ended Nov. 17, according to the Energy Information Administration. Stockpiles at Cushing, Oklahoma, dropped by 1.83 million barrels to 61.2 million, the largest draw since July. Meanwhile, American production gained for a fifth week to 9.66 million barrels a day.