Oil prices firm above $60 on supply cut

Oil extended a two-year high above $60 a barrel in London amid growing signs that the Organization of Petroleum Exporting Countries (Opec) and Russia will press on with supply curbs, and a brief disruption in exports from Iraq’s Kurdish region.

Brent crude futures added 0.4 per cent. Saudi Arabian Crown Prince Mohammed bin Salman last week backed extending production cuts by the Opec and its allies beyond March, following a similar endorsement by Russian President Vladimir Putin earlier this month. Iraq’s Kurds resumed oil exports to Turkey after a short suspension, highlighting uncertainty in the region, which in September voted to secede from the rest of the country.

“High Opec compliance” and “roaring oil demand growth combined over the last few months have accelerated the rebalancing of the oil market,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Reports that Saudi Arabia and Russia are mulling over the prospect of an extension” have “played a part in buoying market sentiment and recently lifting oil prices.”

Both Brent, the benchmark for more than half the world’s oil, and US marker West Texas Intermediate (WTI) crude have jumped in October amid speculation that Opec and partners including Russia will prolong output cuts aimed at reducing a global glut. World stockpiles are down to about 160 million barrels above the five-year average and prices are heading toward “fair” levels, according to Qatar Energy Minister Mohammed Al Sada.

Brent for December settlement, which expires Tuesday, rose as much as 45 cents to $60.89 a barrel on the London-based ICE Futures Europe exchange, the highest since July 2015.