SEOUL: Oil prices inched up on Friday, with Brent crude approaching $60 a barrel, amid tightening market expectations buoyed by comments from Saudi Arabia’s Crown Prince backing the extension of OPEC-led output cuts.
International benchmark Brent crude futures were up 8 cents, or 0.13 percent, at $59.38 a barrel at 0232 GMT. Brent is now a third above its 2017 lows in June and at levels last seen in mid-2015.
US West Texas Intermediate (WTI) crude futures were at $52.67 per barrel, virtually unchanged from their last close, but up by a quarter from their 2017 low in June. WTI has been weaker relative to Brent as rising US production has capped prices there.
“Oil raced higher overnight with Brent finishing in sight of the magical $60 a barrel mark, spurred on by Saudi remarks supporting the oil production cut through to the end of 2018,” Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters on Thursday that the kingdom would support extending the output cut deal in a bid to stabilise oil demand and supply.
The Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia have pledged to curb their production by around 1.8 million barrels per day (bpd) until the end of March to drain a global supply glut. OPEC will meet on Nov.30 in Vienna.
Oil prices have hovered around their highest levels for this year in recent weeks amid growing signs of a tightening market, including talks to extend OPEC-led output cuts and geopolitical risks in Iraq and Iran.
“Prices for both Brent and WTI are now approaching important recent range tops. My rhetorical self is bullish longer term and my system is already long,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Although the rising likelihood that OPEC will extend its output cuts raises expectations for a balanced market, US crude production remains an issue for OPEC as it strives to clear a global overhang.
US crude production rose by 1.1 million barrels per day to 9.5 million bpd in the week ended Oct 20, according to US Energy Information Administration (EIA) data.