Oil rises as Algeria says most OPEC members support extending cuts
NEW YORK (Bloomberg) -- Crude rebounded after Algeria said a nine-month extension to OPEC’s production curbs would be backed by most participating countries.
Futures erased a 2.1% decrease in New York. Algerian Energy Minister Noureddine Boutarfa said Thursday that most OPEC members support Saudi Arabia and Russia’s proposal to prolong the curbs to March next year, and that the rate of compliance should increase. Prices fell in early trading as the market got caught up in the turmoil surrounding President Donald Trump.
The Organization of Petroleum Exporting Countries and its partners are scheduled to meet next week to decide if the supply deal will be rolled over when it expires in June. OPEC’s Kuwait, Iraq and Venezuela, and non-members Oman and South Sudan support the proposal to extend curbs for nine months.
"There’s a lot of chatter about extending the cuts for nine months, which is supportive," Jason Schenker, president of Prestige Economics LLC in Austin, Texas, said by telephone. "Not many people will want to be bearish as the meeting approached. There’s sure to be a decision that will be designed to boost prices."
West Texas Intermediate for June delivery rose 8 cents to $49.15/bbl at 10:58 a.m. on the New York Mercantile Exchange. Prices gained 41 cents to settle at $49.07 on Wednesday, the highest level since April 28. Total volume traded was about 19% above the 100-day average.
Brent for July settlement increased 13 cents to $51.86/bbl on the London-based ICE Futures Europe exchange. The contract gained 56 cents, or 1.1%, to close at $52.21 on Wednesday. The global benchmark crude traded at a $2.31 premium to July WTI.
Initial cuts
OPEC members agreed in November to cut 1.2 MMbopd. Several non-members, including Russia, agreed in December to contribute a combined 600,000 bopd. OPEC’s rate of compliance with its promised cutbacks has averaged 96% this year, according to the International Energy Agency.
"Saudi Arabia, Russia, Kuwait and Iraq have all stated that they support a nine-month extension," Gene McGillian, manager of market research for Tradition Energy in Stamford, Conn., said by telephone. "Now, we’re waiting to see what’s actually accomplished next week."
U.S. crude stockpiles declined 1.75 MMbbl to 520.8 MMbbl last week, down from a record 535.5 million at the end of March, according to the Energy Information Administration. The nation’s oil production dropped to 9.3 MMbpd, EIA data released Wednesday show.
