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Singapore - Oil extended gains as Iran signalled optimism OPEC will agree to a supply-cut deal and Iraq said it will offer new proposals to help bolster the group’s unity before members meet next week in Vienna.
Prices climbed as much as 1.3% in New York, adding to its 5.3% advance last week. Iranian Oil Minister Bijan Namdar Zanganeh said it’s “highly probable” members will reach a consensus, according to comments published by the country’s Shana news service. Iraq will offer three new proposals for the output cut deal this week that are consistent with the group’s policies, The Wall Street Journal reported, citing Iraq Oil Minister Jabbar al-Luaibi.
Oil has rebounded since hitting the lowest in almost two months last week as members of the Organisation of Petroleum Exporting Countries (OPEC) began making renewed diplomatic efforts before their meeting November 30 to finalise the output deal informally agreed to in September. The group is seeking to trim output for the first time in eight years, a plan that has been complicated by Iran’s commitment to boost production and Iraq’s request for an exemption to help fund its war with Islamic militants.
“It’s pretty clear that some people are convinced in the market that this could lead to production cuts,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. “The potential for breaches of any announced agreement is very high, but it is a solid move and it is coming on pretty reasonable volumes.”
West Texas Intermediate for December delivery, which expires on Monday, rose as much as 60 cents to $46.29 a barrel on the New York Mercantile Exchange and was at $46.19 at 12:24 in Singapore. Total volume traded was about 7% above the 100-day average. The more-active January contract added as much as 68 cents, or 1.5%, to $47.04 a barrel.
OPEC optimism
Brent for January settlement gained as much as 63 cents, or 1.3%, to $47.49 a barrel on the London-based ICE Futures Europe exchange. The contract closed at $46.86 a barrel on Friday, capping a 4.7% gain for the week. The global benchmark traded at a premium of 51 cents to January WTI.
It’s likely that OPEC producers will honor the output cut agreement and will try to put it into action, Iran’s Zanganeh said after meeting with OPEC’s secretary-general, Mohammed Barkindo, in Tehran on Saturday. Iraq’s new proposals “are based on other variables and will make it easier for OPEC members to make a decision,” Oil Minister al-Luaibi was cited as saying in an interview with The Wall Street Journal.
Oil-market news:
Russian President Vladimir Putin said he sees no obstacles to OPEC reaching a pact later this month, and Russia is willing to freeze its crude oil output at current levels.
Money managers, producers and consumers made the biggest bets on West Texas Intermediate crude prices in nine years, amid signals more volatility is coming.
Oil drillers added the most rigs in 16 months amid growing confidence that crude prices will rise in coming months, according to Baker Hughes data reported Friday.
