Brent oil prices over $60, OPEC cut extension expected

Oil prices rose on Monday.  Brent prices have risen by 9.5 per cent in the past 16 trading days. Husky photo.

Oil prices up slightly

Brent oil prices ended the session on Monday at its highest point since July 2015 and US crude hit a level not seen since February on expectations that OPEC will extend its supply cut pact.

Benchmark Brent settled at $60.90/barrel, up 46 cents.  Over the past 16 trading days, Brent has risen by 9.5 per cent.  US WTI crude futures rose 25 cents to $54.14/barrel.  WTI has gained 10 per cent in the past 16 trading days.

The Canadian Crude Index rose 85 cents to $40.37/barrel.

Reuters reports analysts from Drillinginfo.com wrote “The market has now held over $49/bbl for over a month, establishing that as the low end of the new range.”

Last week, both Russia and Saudi Arabia voiced support for an extension of the OPEC supply cut agreement which has seen most cartel members, along with non-cartel countries, including Russia, reduce their combined output by 1.8 million barrels per day (b/d).

Reuters reports OPEC’s Secretary-General Mohammad Barkindo said the Russian-Saudi backing for the extension cleared the fog prior to the OPEC meeting in Vienna on Nov. 30.

“The market has rallied pretty significantly and I think it’s predicated on the fact that the Saudis and Russians are continuing the cut agreement,” Gene McGillian, manager of research at Tradition Energy told Reuters.

John Kilduff, parter at Again Capital LLC said “a lot of the investment firms are raising their price targets so there’s a bit of a change in sentiment.”

J.P. Morgan upped its 2018 Brent and WTI forecasts by $11 and $11.40 to $58 and $54.63/barrel, respectively.  The bank said the revised forecasts take into account OPEC cuts and higher-than-expected oil demand which is tightening the crude market.