Bloomberg, Nov 3, 2017: ‘Oil Extends Surge As OPEC Signals Deal, Supply Threats Mount’
Oil closed at its highest in more than two years for a second day as support grew for OPEC to prolong output cuts, while supply threats abounded.
Futures jumped 2 percent in New York, closing above $55 a barrel for the first time since July 2015. While Nigerian militants and Venezuela’s debt woes imperil crude output from two of the world’s chief suppliers, the overarching bullish factor remained the increasing prospects for an extension of the OPEC-led curbs to be decided as early as this month. In the U.S., oil rigs declined by the most in more than a year, and WTI surpassing Thursday’s intraday high also provided upward momentum later in the session.
OPEC has indicated “they are looking to extend the agreement through the end of 2018,” Andrew Lebow, senior partner at Commodity Research Group, said by telephone. “We’ve made a new high and the fundamentals have finally improved.”
Oil has surged on signs that global inventories are shrinking and the Organization of Petroleum Exporting Countries and allied producers may stick to their glut-killing accord beyond its March expiration. Saudi Arabia, Iraq and Kuwait — which together pump more than 50 percent of OPEC’s crude — signaled firm support for an extension that would forestall a re-emergence of the glut next year.
“OPEC chatter also sounds like both the Saudis and Kuwait are both game for extending the deal sooner rather than later,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone.
West Texas Intermediate for December delivery advanced $1.10 to settle at $55.64 a barrel on the New York Mercantile Exchange and climbed for a fourth week. Total volume traded was about 13 percent below the 100-day average. Prices rose as high as $54.84 a barrel on Thursday intraday.
Brent for January settlement added $1.45 to end the session at $62.07 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.21 to January WTI.
The U.S. oil rig count fell by eight rigs to 729, according to Baker Hughes data Friday. That’s the lowest level since May.
A group of the Nigerian militants who inflicted devastating attacks on oil installations last year pledged to resume their campaign in Africa’s second-largest crude producer. In Venezuela, home to the world’s largest tranche of reserves, President Nicolas Maduro announced plans to refinance or restructure sovereign debt, a destabilizing move that may impede the state-controlled oil producer’s ability to do business.
Oil-market news:
- EOG Resources Inc. took the wraps off two new chunks of land in the Permian Basin and Oklahoma that tack on an estimated 750 million barrels of oil to its portfolio.
- Repsol SA reported a third-quarter profit from oil exploration and production, rebounding from a year-earlier loss, as it emulated the earnings performance of its larger European peers.
