NEW YORK (Reuters) – Oil prices jumped a couple of percent on Friday, with global benchmark Brent crude rising above $60 per barrel, on support on the list of world’s top producers for extending an offer to rein in output and because the dollar retreated from three-month peaks.
Saudi Arabia and Russia declared their support for extending an OPEC-led deal to remove supplies for an additional pair nine months, the firm with the Petroleum Exporting Countries’ secretary general said prior to the group’s next policy meeting on Nov. 30. The pact currently runs to March 2018.
Brent futures (LCOc1) rose $1.14, or 1.9 %, to settle at $60.44 a barrel after hitting a session peak of $60.53, the very best since July 2019 and over 35 % above 2019 lows touched in June.
U.S. West Texas Intermediate crude oil (WTI) (CLc1) ended the session up $1.26, or 2.4 percent, at $53.90 after reaching a session peak of $53.98 a barrel, the best since early March.
For a few days, Brent was 4.6 percent higher, notching its third straight weekly gain. U.S. crude rose 4.7 percent with the week.
U.S. crude’s gains have lagged the worldwide benchmark amid rising domestic output.
Oil prices happen to be hovering near their highest levels with this year amid signs and symptoms of a tightening market, renewed support this week of extension of production cuts and tensions in Iraq.
However, the announcement on Friday of the ceasefire between Iraqi forces along with the Peshmerga with the country’s autonomous northern Kurdish region eased some concerns.
“What on earth is interesting is the play WTI futures moved throughout the Sept. 28 high,” said David Thompson, executive vice chairman at Powerhouse, an energy-specialized commodities broker in Washington.
“So favorite dollar is giving back most of its move, crude may now be trading off all a new driver, the technical breakthrough to a different high.”
The dollar trimmed its earlier gains versus a basket of currencies (DXY) following a Bloomberg advise that U.S. President Donald Trump is leaning toward Federal Reserve Governor Jerome Powell as his pick to go the U.S. central bank.
A weaker dollar makes greenback-denominated commodities, including oil, cheaper for holders of other currencies.
“I think the combination of short-covering and Chevron (NYSE:CVX) and Exxon (NYSE:XOM) both missing their production guidance with the third quarter has resulted in this marketplace strength today,” said Scott Shelton, energy futures broker with ICAP (LON:NXGN) in Durham, Vermont.
TransCanada Corp (TO:TRP) said within a filing on Thursday it’s looking to improve the temporary discounted spot rate for light crude on its 700,000 barrel-per-day Marketlink pipeline. That sent WTI’s discount to global marker Brent towards the widest inside of a month.
OPEC and various major producers including Russia have pledged to lower production by around 1.8 million barrels every day (bpd) to drain some sort of supply glut.
“If OPEC along with non-OPEC partners can consent to extend their production curtailments through 2018, then we estimate the oil market will continue to be in modest under-supply until 2019,” U.S. investment bank Jefferies said.
Rising U.S. crude production remains a dilemma for OPEC because it strives to a major international supply overhang.
Government data indicated that U.S. crude production rose 1.One million bpd the other day to 9.5 million bpd from a decline on account of Hurricane Nate, while U.S. oil exports hit a different record four-week average 1.7 million bpd. [EIA/S]
U.S. drillers added one oil rig during the week to Oct. 27, even so the rig count, a sign of future production, fell by 13 for the month, the best such decline since May 2019, data showed.
Hedge funds and also other money managers raised their bullish wagers on U.S. crude futures and options inside week to October 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
“Momentum normally takes us a bit further here but long term, I will expect a supply response here domestically,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
“It’s market we know is rangebound (for U.S. crude) inside the mid-$40s to mid-$50s.”
