Brent Crude Propelled Past $70 as Iraq Calls for Sticking to OPEC Cuts

Oil reached new highs in London as OPEC members called for output curbs to continue, allaying concerns that the recent rally could weaken their commitment.

Brent crude closed above $70 a barrel for the first time in three years after Iraqi Oil Minister Jabbar al-Luaibi said Saturday that production curbs have contributed to stability in the market and should remain, echoing comments from Qatar and the United Arab Emirates. The global benchmark had only briefly breached the key level last week.

The comments came as Citigroup Inc., Societe Generale SA, and JPMorgan Chase & Co. predict the coalition of oil producers could begin winding down their intervention from the middle of the year, before its scheduled conclusion in December.

The call to maintain cuts by Iraq “is another sign that the market is going to go up,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “We are seeing supply, globally, really start to tighten.”

Oil is extending a two-year rebound as the Organization of Petroleum Exporting Countries and its allies reduce supply to drain a global glut. Though they’ve said their historic deal will run until the end of this year, OPEC is “very likely to cut short” the pact if markets become balanced, JP Morgan Securities said in a report.

Brent for March settlement rose 39 cents to $70.26 a barrel on the London-based ICE Futures Europe exchange, the highest close since December 2014. Prices climbed 3.3 percent last week. The global benchmark crude traded at a premium of $5.40 to March WTI.

West Texas Intermediate for February delivery rose 51 cents to $64.81 a barrel on the New York Mercantile Exchange. Total volume traded was about 51 percent below the 100-day average. There was no settlement Monday because of the Martin Luther King holiday in the U.S., and all transactions will be booked Tuesday.

The U.A.E. sees no big changes in OPEC policy as a result of short-term price fluctuations, Energy Minister Suhail Al Mazrouei said in Abu Dhabi. Qatari Energy Minister  Mohammed bin Saleh Al Sada told the official Qatar News Agency that the group should only review its supply accord once crude stockpiles return to their five-year historical average.

Oil-market news:

Bank of America Merrill Lynch raised its 2018 Brent forecast to $64 a barrel from $56. The market is tightening faster than expected because of “improving cyclical conditions,” cold winter weather and strong OPEC compliance, the bank said. U.S. drillers added 10 rigs to fields last week, the most in more than six months, according to data from Baker Hughes Friday. OPEC holds enough spare output capacity to push the global market from deficit to surplus this year, but there’s low probability of it coming into play given the continued commitment to the supply-cuts deal, BMI Research said Jan. 12.