Crude climbs to 1-month highs on hopes for supply cut extension

Published 05/19/2017, 07:00 AM
© Reuters.  Crude prices rally with eyes on OPEC meeting
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Investing.com - U.S. oil prices climbed to one-month highs on Friday, boosted by hopes major oil producers will decide to extend their current supply cut plan.

U.S. crude futures for June delivery were up 1.22% at $49.95 a barrel, the highest since April 26.

On the ICE Futures Exchange in London, the July Brent contract rallied 1.20% to $53.15 a barrel, the highest since April 20.

Crude prices remained supported after Saudi Arabia and Russia agreed earlier in the week to extend oil output cuts for a further nine months until March 2018.

However, the 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

In November last year, OPEC and other major global producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.

The U.S. Energy Information Administration said on Wednesday that crude oil inventories fell by 1.8 million barrels in the week ended May 12, the sixth weekly decline in a row.

However, the drawdown came in below expectations for a drop of 2.3 million barrels, underlining the view that an ongoing rebound in U.S. shale production is derailing efforts by other major producers to rebalance global oil supply and demand.

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