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Oil prices climb to 4-week high on speculation of extended OPEC cuts

Published 05/22/2017, 02:37 AM
© Reuters.  Oil prices climb to 4-week high
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Investing.com - Oil prices were higher in European trading on Monday, touching the strongest level in around four weeks on growing expectations that members of Organization of the Petroleum Exporting Countries will agree to extend production cuts when they meet later this week.

The U.S. West Texas Intermediate crude June contract tacked on 28 cents, or around 0.6%, to $50.95 a barrel by 2:35AM ET (06:35GMT). It rose to an overnight high of $51.26, a level not seen since April 21.

The U.S. benchmark gained $1.01 on Friday. It scored a weekly gain of $2.49, or about 5%, last week, the second straight weekly advance.

Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London added 26 cents to $53.87 a barrel, after climbing to its highest since April 19 at $54.17 earlier.

London-traded Brent futures jumped $1.10 in the prior session, to notch a gain of $2.77, or roughly 5.2%, last week.

Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on May 25 to decide whether to extend their current production agreement beyond a June 30-deadline.

In November last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30.

Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected.

There is also talk that OPEC is looking at the option of deepening current production cuts, but it is not clear whether there would be support for that.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in U.S. shale oil output.

Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 18th week in a row, the second-longest such streak on record, implying that further gains in domestic production are ahead.

The U.S. rig count rose by 8 to 720, extending an 11-month drilling recovery to the highest level since April 2015.

Elsewhere on Nymex, gasoline futures for June inched up 0.7 cents, or 0.4%, to $1.657 a gallon, while June heating oil advanced 0.3 cents to $1.589 a gallon.

Natural gas futures for June delivery tacked on 3.1 cents to $3.384 per million British thermal units.

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