Oil Holds Gains
(Bloomberg) -- Oil held gains near the highest level this year after OPEC and its partners committed to continue production cuts until at least June, when they will meet to discuss an extension.
Futures in New York were little changed after advancing 1 percent on Monday. A committee of the group known as OPEC+ agreed to go beyond their pledged supply curbs in the coming months at a meeting in Baku, Azerbaijan. Still, delaying a decision on prolonging the cuts beyond June was seen as a sign of strain between the coalition’s two biggest producers, Saudi Arabia and Russia.
Oil has rallied 30 percent this year as the Organization of Petroleum Exporting Countries and allies reduced production to avert a global glut on the back of record-high U.S. output. Meanwhile, American sanctions continue to squeeze supplies from Iran and Venezuela. Yet Saudi Energy Minister Khalid Al-Falih says the group’s task of rebalancing the oil market has a long way to go.
Al-Falih’s comments have “raised expectations OPEC+ cuts will be extended into the second half of this year,” said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. Russia, which benefits from being part of the OPEC+ coalition, would eventually support the extension, he said.
West Texas Intermediate for April delivery traded at $59.10 a barrel on the New York Mercantile Exchange, up 1 cent, at 3:22 p.m. in Singapore. The contract rose 57 cents to $59.09 on Monday, the highest close since Nov. 12.
Brent for May settlement rose 12 cents to $67.66 on the London-based ICE Futures Europe exchange. The contract added 38 cents to $67.54 on Monday. The global benchmark crude traded at an $8.26 premium to WTI for the same month.
OPEC+’s committee on Monday recommended canceling a planned April meeting, saying it would be too soon to determine whether the cuts should continue into the second half. The change in timing, which still needs to be agreed by the wider coalition, means they probably won’t decide on the extension until late June, just days before they expire.
Russian Energy Minister Alexander Novak said current prices are acceptable to both consumers and producers and that it will take a wait and see approach on cuts. While there’s general support within OPEC for an extension, with members including Iraq voicing support behind closed doors, Novak remains opposed, said a delegate, who asked not to be named because the talks were private.
Meanwhile, nationwide crude inventories in the U.S. are forecast to rise 2 million barrels in the week to March 15, according to a Bloomberg survey of analysts before government data due Wednesday.
--With assistance from James Thornhill.To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at email@example.com To contact the editors responsible for this story: Pratish Narayanan at firstname.lastname@example.org Ovais Subhani, Serene Cheong
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