Crude Oil Prices Settle Higher on Rising Expectations Opec Will Extend Deal
Investing.com
Published Sep 25, 2017 14:40
Updated Sep 25, 2017 15:32
Investing.com – Crude oil prices settled higher on Monday amid growing expectations that producers will extend output cuts sooner rather than later as traders cheered signs that the market is starting to rebalance.
On the New York Mercantile Exchange crude futures for November delivery rose 3.1% to settle at $52.22 a barrel, while on London's Intercontinental Exchange, Brent gained 3.5% to trade at $58.87 a barrel.
Members of the Organization of the Petroleum Exporting Countries (Opec) and other major producers met in Vienna on Friday, and pledged to revisit the idea of extending the output-cut agreement beyond the March 2018 deadline in the coming months.
"I believe that January is the earliest date when we can actually, credibly speak about the state of the market," Russian Energy Minister Alexander Novak said.
Other ministers, however, expressed an eagerness to reach a decision this year, fuelling expectations that an extension to the global accord to curb production beyond the March 2018 will be agreed sooner rather later.
“It’s [the rally in oil prices] all driven by the idea that the production cut is starting to work and the rebalance is underway,” said Gene McGillian, director of market research at Tradition Energy in New York.
In May, Opec and non-Opec members agreed to extend production cuts of 1.8m barrels per day for a period of nine months until March 2018.
Some analysts, however, were quick to downplay the prospect of a prolonged rally, highlighting that rising oil prices may encourage oil exporters to pump above agreed-upon levels, lowering the rate of compliance with the global accord to curb output.
"Even at these prices levels, they're still bleeding cash. So they want more money and I think the incentive to stay together starts to decrease," said Francisco Blanch, head of global commodities and derivatives research at Bank of America Merrill Lynch.
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Written By: Investing.com
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