Tags: oil | Saudi Arabia | OPEC | energy

Oil Jumps as Saudi Arabia Voices Support for OPEC Deal Extension

Oil Jumps as Saudi Arabia Voices Support for OPEC Deal Extension
(Dreamstime)

Monday, 15 May 2017 09:38 AM

Oil jumped to its highest level in two weeks after the energy ministers of Saudi Arabia and Russia said they are in favor of extending OPEC’s output-cut deal for nine months.

Futures added as much as 1.8 percent in New York to $48.70, on course for its highest close since May 1. Saudi Arabia and Russia say the production cuts are working, and inventories are decreasing, Energy Minister Khalid Al-Falih, alongside his Russian counterpart, said in Beijing. The ministers agree the deal should be extended through the first quarter of next year at the same volume of cuts, Al-Falih said.

“The market is certainly reacting to comments from Saudi Arabia and Russia’s ministers, and it should help at least maintain current prices,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “However, we’ll see whether the rebound remains until the U.S. market opens. It could be short-lived and may not be able to boost prices anywhere above $60 or $70.”

Russia and Saudi Arabia, the largest of the 24 nations that agreed to cut production for six months starting in January, are reaffirming their commitment to the deal amid growing doubts about its effectiveness. A recent increase in Libyan output, together with a surge in North American production and signs of recovery in Nigeria, may undercut OPEC’s strategy to re-balance the market and prop up prices.

West Texas Intermediate for June delivery climbed as much as 86 cents before trading at $48.64 a barrel on the New York Mercantile Exchange at 12:28 p.m. in Seoul. Total volume traded was about 94 percent above the 100-day average. The contract gained $1.62 to $47.84 a barrel last week.

Brent for July settlement added 78 cents to $51.62 a barrel on the London-based ICE Futures Europe exchange. The contract increased 7 cents to $50.84 on Friday. The global benchmark crude traded at a premium of $2.72 to July WTI.

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Oil jumped to its highest level in two weeks after the energy ministers of Saudi Arabia and Russia said they are in favor of extending OPEC's output-cut deal for nine months.
oil, Saudi Arabia, OPEC, energy
319
2017-38-15
Monday, 15 May 2017 09:38 AM
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