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London. — Brent oil extended gains into an eighth straight session yesterday, having recovered nearly all of March’s losses, after Saudi Arabia was said to be pushing its fellow Opec members and some rivals to prolong supply cuts beyond June.
International benchmark Brent crude futures were up 33 US cents by 9am GMT at $56,56 a barrel, their highest since early March. If the day’s gains held, it will be the longest winning streak for Brent since February 2012.
US West Texas Intermediate (WTI) crude futures were up 26c at $53,66 a barrel, on track for a seventh straight session of gains.
Saudi Arabia, de-facto leader of oil cartel Opec, has told other producers that it wants to extend a co-ordinated production cut beyond the first half of the year, the Wall Street Journal reported.
“Given yesterday’s developments in the oil market it is rather surprising to have seen limited price gains across the board,” PVM Oil Associates analyst Tamas Varga said.
“Maybe the weekly EIA data . . . made buyers cautious and as a result WTI settled only 32c per barrel (bbl) higher at $53,40/bbl and Brent 25c/bbl up at $56,23/bbl. Or maybe the sluggish stock market performance put a lid on yesterday’s price strength but we should not be surprised to see the oil market make amends today.”
Opec and other producers, including Russia, have pledged to cut output by about 1,8-million barrels per day during the first half of 2017 to rein in oversupply.
Saudi Arabia has cut more than it pledged, which has helped compensate for less stringent compliance by other signatories to the deal. Its output has fallen 4,5 percent since late 2016.
“The Saudi Arabian production reduction appears to be ahead of forecast and gave oil a boost,” said Jeffrey Halley of futures brokerage Oanda in Singapore.
Fearing a loss of market share, Saudi Arabia was shielding its most important customers in Asia from the cuts, continuing to supply them with all contractual volumes.
In the US, production and inventories were surging. The government’s Energy Information Administration (EIA) said on Tuesday that US 2018 crude output would rise to 9,9-million barrels per day, from 9,22-million barrels per day in 2017.
With demand expected to rise by 340 000 barrels per day in 2018, that would leave increasing amounts of US oil for export or storage.
US crude inventories hit a record 535.5-million barrels in April. The EIA was scheduled to publish official US production and inventory data yesterday. — Reuters.
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