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Oil hits highest since July 2015 as producers say market rebalancing

US West Texas Intermediate crude for November delivery rose $1.02, or 2%, to $51.68 a barrel

Reuters  |  New York 

Oil

prices hit a more than two-year high on Monday after major producers said the market was on its way towards rebalancing, while Turkey threatened to cut flows from Iraq's Kurdistan region toward its ports.

The November Brent futures contract was up $1.51, or 2.5 per cent, at $58.37 a barrel by 11:33 a.m. EDT (1533 GMT), its highest since July, 2015.

US West Texas Intermediate for November delivery rose $1.02, or 2 per cent, to $51.68 a barrel, close to highs last seen in May.

"It's all driven by the idea is that the production cut is starting to work and the rebalance is underway," said Gene McGillian, director of market research at in New York.

Even as both contracts rallied, concerns about U.S. production growth weighed on WTI, widening the spread between the two, he said.

The discount of the WTI to Brent futures widened to $6.61, the widest since August 2015.

Turkey has said it could cut off a pipeline that carries from northern Iraq to the market, putting more pressure on the Kurdish autonomous region over its independence referendum.

The Iraqi government does not recognise the referendum and has called on foreign countries to stop importing Kurdish

"If this boycott call proves successful, a good 500,000 fewer barrels of per day would reach the market," Commerzbank said in a note.

The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping to lift prices by about 15 per cent in the past three months.

Kuwaiti Minister Essam al-Marzouq, who chaired Friday's meeting in Vienna of the Joint Ministerial Monitoring Committee, said output curbs were helping to cut inventories to their five-year average, OPEC's stated target.

Russia's energy minister said no decision on extending output curbs beyond the end of March was expected before January, although other ministers suggested such a decision could be taken before the end of this year.

Iran expects to maintain overall and condensate exports at around 2.6 million bpd for the rest of 2017, a senior official from the country's state company said.

The energy minister from the said the country's compliance with OPEC's supply cuts was 100 percent.

Nigeria is pumping below its agreed output cap, its minister said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, September 25 2017. 23:00 IST
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