- Russia, Saudis agree to extend into 2019 deal to manage market
- Canada’s largest producing-region announced production curbs
Oil was jolted higher by efforts across the globe to support prices as Saudi Arabia and Russia extended their pact to manage the market and Canada’s largest producing province ordered unprecedented output curbs.
After their worst month in a decade, futures in New York and London advanced more than 5 percent on Monday. While Moscow and Riyadh have yet to confirm any fresh cuts, the agreement by the Russian and Saudi leaders over the weekend opens the door for a deal at the OPEC meeting this week in Vienna. Alberta’s decision to curtail production by 325,000 barrels a day put a rocket under oil’s rally.
Bullish investors are taking heart that the world’s biggest producers are ready to take action after crude collapsed into a bear market on fears of a glut. Speculation over whether the Organization of Petroleum Exporting Countries and its partners will curb output has gripped the market in recent weeks, causing volatility to spike. While OPEC delegates said the Saudi and Russian leaders have given political blessing for an agreement, questions remain, including the size of any potential cut.
“We may see prices recovering to $60 a barrel this month and depending on how much and until when OPEC’s output curbs will continue, we might be heading toward $70,” Sungchil Will Yun, Seoul-based commodity analyst at HI Investment & Futures, said by phone. “Canada’s production cuts are adding to the bullish sentiment in the oil market, removing concerns of oversupply that has so far been dampening prices.”
West Texas Intermediate for January delivery climbed as much as $2.92, or 5.7 percent, to $53.85 a barrel on the New York Mercantile Exchange, its biggest intraday gain since June. The contract lost 22 percent last month. Total volume traded was more than triple the 100-day average.
Brent for February settlement rose as much as 5.3 percent to $62.60 a barrel on London’s ICE Futures Europe exchange. The global benchmark crude was at an $8.61 premium to WTI for the same month. The January contract expired on Friday after declining 1.3 percent.
Qatar to Withdraw From OPEC From January 1
Qatar will withdraw from the Organization of Petroleum Exporting Countries effective from January 1, according to the country’s energy affairs minister, Bloomberg News reports.
Energy Minister Saad Sherida Al-Kaabi, speaking at a news conference in Doha, said his country will not remain committed to OPEC agreements after departure. Qatar, the world’s largest exporter of liquefied natural gas, intends to focus on gas production.
World’s top investors: Time to buy oil!