Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Oil settles above $50 as Iran calls for non-OPEC support

Published 10/03/2016, 03:24 PM
© Reuters. A Texaco service station displays the price of petrol and diesel close to the financial centre of London
LCO
-
CL
-

By Barani Krishnan

NEW YORK (Reuters) - Oil rose more than 1 percent on Monday, with Brent settling above $50 a barrel the first time since August and U.S. crude hitting three-month highs, after Iran exhorted the need for other oil producers to join OPEC in supporting the market.

The dollar's retreat from session highs also enticed more buyers into oil as greenback-denominated crude became less costly to holders of other currencies. [FRX/]

Iranian President Hassan Rouhani told his Venezuelan counterpart Nicolás Maduro in a telephone conversation that it was essential for oil producing countries to take a decision to raise the price of oil and stabilize the market, Tehran state news agency IRNA reported.

Rouhani's remarks added to the bullish fervor in the market since Wednesday after the Organization of the Petroleum Exporting Countries announced its first planned output cut in eight years. [nL8N1C42M9]

Brent settled up 70 cents, or 1.4 percent, at $50.89 a barrel. It was its first close above the key $50 mark since Aug. 19. Brent earlier reached a session peak of $51.14.

U.S. West Texas Intermediate (WTI) crude closed up 57 cents, or 1.2 percent, at $48.81. Prior to settlement, it hit $49.02, its highest since July 5.

Iran's call to non-OPEC members helped the market to rally "because there are many who want to believe this deal will get done," said Phil Flynn, analyst at the Price Futures Group brokerage in Chicago.

"There's already a soft commitment from Russia that it will be part of the OPEC plan and if more non-OPEC members get on board, prices can only go higher," Flynn added.

Oil prices rose about 7 percent in September, ending up a second straight month, after OPEC unveiled plans to reduce output to between 32.5 million and 33.0 million barrels per day.

How much oil each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

OPEC's oil output likely reached 33.6 million bpd in September from a revised 33.5 million bpd in August, its highest in recent history, a Reuters survey found on Friday.

OPEC member Iran, the No. 4 crude exporter, will sign on Tuesday a new petroleum contract that would be cornerstone to raising its crude output to the pre-sanction levels of 4 million bpd.

© Reuters. A Texaco service station displays the price of petrol and diesel close to the financial centre of London

"Naysayers will undoubtedly fade the headline (of the output cut) and deem the agreement typical OPEC noise, yet at a minimum it means that OPEC has bought themselves a price floor for at least the next two months heading into the November meeting," analysts at RBC Capital Markets said in a note.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.