Oil Treads Water With OPEC's Silence on Supply-Cut Extension
(Bloomberg) -- Oil rose slightly after an OPEC gathering concluded with no decision on an extension or deepening of supply cuts.
Futures toggled between small gains and losses in New York on Friday, ending the session 0.2 percent higher. As an OPEC committee meeting wrapped up, Russian Energy Minister Alexander Novak said the cartel and allied producers can wait until at least January to consider prolonging the output limits. Kuwait's Oil Minister Issam Almarzooq said after the meeting that "the process is working fine so far."
"People feel like the market generally is rebalancing," Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts, said by telephone. "The news out of OPEC is sort of bland, but these days, bland is good."
Oil is on track for only its third monthly gain for 2017 as supply cuts by the Organization of Petroleum Exporting Countries and partners such as Russia showed signs of whittling the worldwide crude glut. Nigeria, which along with Libya is currently exempt from the supply-reduction deal, reiterated that it would cap output once its production stabilizes around 1.8 million barrels a day. The next key event will be a Nov. 30 meeting of OPEC ministers.
"It's going to come down to the meeting," Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said in a telephone interview. Traders will be more interested in deeper production cuts than an extension of the existing constraints, he said.
West Texas Intermediate for November delivery rose 11 cents to settle at $50.66 a barrel on the New York Mercantile Exchange. Total volume traded was about 40 percent below the 100-day average. Prices posted a 1.5 percent weekly advance.
Brent for November settlement added 43 cents to end the session at $56.86 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $6.20 to WTI.
Brent futures for near-term delivery are trading at a marked premium to longer-term contracts, a pattern known as backwardation that shows demand is exceeding supplies.
Oil inventories in developed economies have dropped by 170 million barrels since January and backwardation in prices demonstrates stockpiles are shrinking and demand is rising, Kuwait's Almarzooq said before the meeting on Friday. There is no reason for deeper cuts, he told reporters in Vienna. Meanwhile, OPEC's Secretary General Mohammad Barkindo said it's critical for the group to maintain focus and fully implement agreed curbs.
"Overall, the market viewed the meeting as a non-event," Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. "At the end of the day, even though they raised hopes, there was nothing solid."
--With assistance from Heesu Lee Ben Sharples and Rakteem Katakey
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