Crude Rebounds as OPEC Hints at Longer Oil Output Cuts

Crude Rebounds as OPEC Hints at Longer Oil Output Cuts
Oil climbed as top crude-exporting countries suggest they may extend output curbs beyond this year, adding momentum to a monthly rebound.

(Bloomberg) -- Oil climbed as top crude-exporting countries suggest they may extend output curbs beyond this year, adding momentum to a monthly rebound.

Futures in New York posted a 5.4 percent increase in March, erasing February losses fueled by mounting American stockpiles. Some OPEC producers and allies are considering prolonging efforts to drain a global supply glut up to the middle of next year, Iraqi Oil Minister Jabbar al-Luaibi said at a conference in Baghdad.

“The potential for OPEC to extend their agreement instead of starting to cut it off at the end of the year is a positive development,” said Park City, Utah-based Mark Watkins, who helps oversee $151 billion in assets at U.S. Bank Wealth Management. “It shows OPEC is serious about continuing to have a stable price for oil.”

Crude has rebounded more than 50 percent since June, with the rally regaining steam this month as geopolitical worries heat up. President Donald Trump’s appointment of John Bolton as national security adviser triggered speculation of renewed sanctions against Iran, OPEC’s third-largest producer.

Meanwhile, the rapid increase in American crude production, which has topped 10 million barrels a day each week since early February, has placed a lid on prices that have remained below January’s three-year high of $66.66.

West Texas Intermediate for May delivery gained 56 cents to settle at $64.94 a barrel on the New York Mercantile Exchange, with prices posting a third-straight quarterly gain, the longest streak since 2011.

Brent for May settlement, which expires Thursday, added 74 cents to end the session at $70.27 a barrel on the London-based ICE Futures Europe exchange. The more-active June contract rose 58 cents to settle at $69.34. The global benchmark traded at a $5.33 premium to WTI. The European bourse, along with Nymex, will be closed for the Good Friday holiday.

At the same energy conference where Iraq’s Al-Luaibi spoke, OPEC Secretary-General Mohammad Barkindo said the group is looking for long-term cooperation with other global producers.

In the U.S., the most recent Energy Information Administration data showed that while crude inventories ticked higher, gasoline supplies shrank. BNP Paribas boosted its 2018 WTI and Brent forecasts amid OPEC’s efforts to balance markets and the geopolitical fallout from tensions between the U.S. and Iran.

“People are focused on the fundamentals of oil and they are very strong right now,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “We are seeing very strong demand for oil around the globe. As refiners come out of maintenance, we are going to be in a very tight marketplace.”

Other oil-market news:

The U.S. oil rig count declined by 7 to 797 rigs, the largest drop since November, according to Baker Hughes data released on Friday. Gasoline futures rose 0.3 percent to settle at $2.0179 a gallon. Exxon Mobil Corp. stole the show in Brazil, dominating bidding in the country’s most successful auction to date of promising offshore oil exploration blocks.

With assistance from Tsuyoshi Inajima, Sharon Cho and Alex Longley. To contact the reporter on this story: Jessica Summers in New York at To contact the editors responsible for this story: David Marino at; Reg Gale at Debarati Roy.


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Robert Parisi  |  March 30, 2018
In order to make an orderly transition to sustainable/greener energy feedstocks, all the presently available conventional energy sources need to be as consistently available and feasibly extracted until the bridge to Greener/Sustainable feedstocks are in ample supply. Oil is by far the most desirable for the widest number of various uses and geographic situations since Natural Gas has persistently been very difficult and expensive to transport or transfer in form from Gas to Liquid and back to Gas again. In the meantime, in order to maintain a continuous flow of oil for the benefit of producers and consumers alike a commodity price that allows ample CAPEX for the E&P segment to maintain or increase its global recoverable reserves is vital. Naturally Energy companies need to extract increasingly scarce and difficult to feasibly deliver crude oil and remain solvent in the process. As things stand now an average Spot Crude price for Brent and WTI will need to remain ~$70 per barrel in current $$ or risk supply disruptions by the beginning of the Next decade.