Oil in New York rose to the highest level this year after OPEC and its partners agreed to go beyond their pledged supply curbs in the coming months.
Futures gained as much as 0.7 percent after advancing 1 percent on Monday. A committee of the OPEC+ group reaffirmed at a meeting in Baku, Azerbaijan that it will continue production cuts until at least June. Saudi Arabian Energy Minister Khalid Al-Falih said oil market fundamentals have “significantly improved but more needs to be done.”
“Commitments to broader, deeper cuts would virtually guarantee a tighter oil market through the second half, with fewer bearish trends on the horizon,” Citigroup Inc. analysts including Ed Morse wrote in a report.
Oil has rallied about 30 percent this year as the Organization of Petroleum Exporting Countries and allies reduced production to avert a global glut on the back of record-high U.S. output. American sanctions continue to squeeze supplies from Iran and Venezuela.
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West Texas Intermediate for April delivery traded at $59.50 a barrel on the New York Mercantile Exchange, up 41 cents, at 10:49 a.m. in London. The contract rose 57 cents to $59.09 on Monday, the highest close since Nov. 12.
Brent for May settlement gained 58 cents to $68.12 on the London-based ICE Futures Europe exchange, after increasing 38 cents on Monday. The global benchmark crude traded at an $8.32 premium to WTI for the same month.
The OPEC+ committee on Monday recommended canceling a planned ministerial meeting in April, saying it would be too soon to determine whether the cuts should continue into the second half of the year. The change in timing, which still needs to be agreed by the wider coalition, means the group probably won’t decide on an extension until late June, just days before they expire.
Russian Energy Minister Alexander Novak said current prices are acceptable to both consumers and producers and that it will take a wait and see approach on cuts. While there’s general support within OPEC for an extension, with members including Iraq voicing support behind closed doors, Novak remains opposed, said a delegate, who asked not to be named because the talks were private.
Meanwhile, nationwide crude inventories in the U.S. are forecast to have risen by 2 million barrels in the week to March 15, according to a Bloomberg survey of analysts before government data due Wednesday.
Other oil-market news: U.S. sanctions can’t completely stop OPEC member Iran from exporting oil, the producer group’s secretary-general, Mohammad Barkindo, tells Bloomberg Television. Libya boosted crude production by a third after restarting its biggest field, and its top oil official sees further gains when companies like BP Plc invest and start pumping oil in the politically divided OPEC nation. The U.S. is making progress on “some of the trickiest issues” in ongoing talks to reach a comprehensive trade deal with China, Kevin Hassett, chairman of the Council of Economic Advisers, said on CNBC.