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Oil adds to rally, heads for fourth week of gains

Reuters  |  NEW YORK 

By and Jessica Resnick-Ault

(Reuters) - prices rose for a sixth day on Friday after Russia's minister said that crude supplies were "not balanced yet," alleviating market concerns about a wind-down of the OPEC-led deal to reduce production.

Russian Minister said ministers from leading OPEC and non-OPEC producers will discuss the possibility of exiting the deal at a coming committee meeting, but said that "we see that the market surplus is decreasing, but the market is not completely balanced yet."

His comments boosted prices, which rebounded from earlier decline, though the market has not hit the heights it touched on Thursday, when Brent crude topped $70 a barrel for the first time since December 2014.

Markets remained buoyed by the comments throughout the session, shrugging off data that suggested the U. S. production may continue to surge.

Brent crude futures rose 61 cents to settle at $69.87 a barrel. U. S. West Intermediate (WTI) crude futures rose 50 cents to $64.30. WTI hit its strongest since late 2014 at $64.77 on Thursday.

For the week, Brent rose 3.3 percent while WTI jumped 4.7 percent.

The agreement between the Organization of the Petroleum Exporting Countries and reached in late 2016 to cut 1.8 million barrels of crude daily is due to last until the end of 2018.

Novak said the current price was short-term, and he would discuss the situation at a ministerial monitoring committee meeting in Oman, scheduled for Jan. 21.

Russia's said - part of the agreement with the Organization of the Petroleum Exporting Countries to reduce supply - should start to exit the pact if crude prices remain at $70 a barrel for more than six months.

Major producing-countries have grown concerned that as prices remain near these levels, it will spur additional production from U.

S. shale patches in and North Dakota, risking overwhelming the market with additional supply, and hurting OPEC's market share.

U. S. companies added 10 rigs this week, the biggest increase since June, bringing the total rig count to 752, the most since September, General Electric Co's services firm said.

Fatih Birol, of the Paris-based International Agency, said prices at $65 to $70 risked encouraging more oversupply from U. S. shale drillers.

"If you look at any kind of momentum indicator this is telling you this is way overbought," said Robert Yawger, director of futures at Mizuho in "However, there are definitely issues supporting the market."

U. S. crude production fell in the most recent week by nearly 300,000 barrels per day to about 9.5 million bpd, which analysts attributed to the deep freeze across most of the country.

The Department expects production will blow through 10 million bpd in the next few months, en route to 11 million bpd by next year, rivaling and

Futures contracts show an expectation for prices to pull back by year end, with the December U. S. crude futures contract currently trading just above $60 a barrel.

Later-dated futures trading lower than the spot price is known as backwardation, and is expected to inhibit production because it implies a lower price for future barrels sold.

(Additional reporting by in London and Henning Gloystein in Singapore; Editing by and Edmund Blair)

(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: Sat, January 13 2018. 01:54 IST
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