Oil approaches one-year high as speculators buy into output cut deal.
Oil prices rose around one percent on Monday, approaching one-year highs, as speculators raised bets that oil prices would gain on the back of a landmark agreement among OPEC producers to rein in record output levels.
Global benchmark Brent crude futures LCOc1 reached a high of $52.57 a barrel, not far off a one-year high of $52.86 a barrel, by 1207, up 64 cents on Friday’s close.
U.S. futures CLc1 also gained ground, trading at $50.32, up 51 cents.
The Organization of the Petroleum Exporting Countries (OPEC) aims to agree an output cut by the time it meets in late November. The goal is to cut production to a range of 32.50 million barrels per day (bpd) to 33.0 million bpd.
OPEC’s current output PRODN-TOTAL is a record 33.6 million bpd.
The news fueled an oil price rally last week which led to speculators making a record increase in bullish positions on Brent crude prices, latest data from InterContinental Exchange (ICE) showed. [O/ICE]
Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday he was optimistic a global production deal to limit supplies could be reached at an OPEC meeting scheduled for the end of next month.
He also said he would meet Russian Energy Minister Alexander Novak in Istanbul in the coming days to discuss Russia’s reaction to last month’s agreement, and that a technical committee meeting between OPEC members and non-OPEC countries would take place in two weeks.
Novak, however, said Moscow preferred an output freeze over a cut.
“We in general will look at this (proposal) but I think that for us a more favorable situation would be to maintain output levels,” he said, attending the World Energy Congress in Istanbul.
Analysts at ABN Amro took a more cautious view on an OPEC deal, saying previous hints by the group of output cuts have always failed to be followed up by action.
“Adding to these doubts is the realization that certain OPEC countries are demanding to be treated as exceptions,” analysts said, referring to Libya and Nigeria, whose production has been affected by domestic unrest.
Iraq, OPEC’s second biggest producer, had already poured cold water on expectations, saying over the weekend that it wants to raise output further in 2017.
(,Additional reporting by Henning Gloystein in Singapore, editing by Ruth Pitchford and Adrian Croft,Reuters.com)