By October 27, 2017 Read More →

Oil prices up, Brent hits $60 on support for OPEC deal extension

oil prices

Oil prices rose on Friday after the US dollar fell slightly and Saudi Arabia and Russia both declared their support for an extension of the OPEC supply deal. Anadarko photo.

Oil prices rise over 2 per cent

Oil prices rose on Friday after the top participants in the OPEC supply cut pact said they would support extending the deal and the US dollar fell from three-month peaks.

After reaching an early session high of $60.08, the highest since July 2015, Brent sat at $60.03/barrel, up 99 cents by 1:10 p.m. EDT.  US WTI rose $1.16 to $53.80/barrel and the Canadian Crude Index was up 65 cents to $40.17/barrel.

OPEC Secretary General Mohammed Barkindo told Reuters that Saudi Arabia and Russia have declared their support for prolonging the OPEC deal to curb production by 1.8 million barrels per day (b/d) for another nine months.

The deal is currently set to expire in March 2018.

On Thursday, Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters that the Saudis will support extending the agreement to stabilize the oil market.

“If OPEC and their non-OPEC partners can agree to extend their production curtailments through 2018, then we estimate the oil market will remain in modest under-supply until 2019,” U.S. Investment bank Jefferies told Reuters.

OPEC is expected to discuss the possible extension of the supply agreement at their November meeting in Vienna.

Recently, signs of a tightening market, hints that the OPEC deal would be extended and tensions in Iraq have boosted oil prices.  On Friday, a ceasefire between Iraqi forces and the Peshmerga from the northern Kurdish region eased some analysts’ concerns.

“What is interesting is that the pop in WTI futures moved above the Sept. 28 high,” David Thompson, executive vice president at Powerhouse told Reuters.

“So even though the dollar is giving back some of its move, crude may now be trading off of a new driver, the technical breakthrough to a new high.”

The US dollar dipped against other currencies after Bloomberg reported that US President Donald Trump is considering Federal Reserve Governor Jerome Powell as his choice to head the US central bank.

“I think the combination of short covering and Chevron and Exxon both missing their production guidance for the third quarter has resulted in the market strength today,” Scott Shelton, energy futures broker with ICAP told Reuters.

On Thursday, Reuters reported that TransCanada Corp said in a filing that it is seeking to boost the temporary discounted spot rate for light crude on its Market pipeline.  Following the release, WTI’s discount to Brent was sent to the widest in a month.

On Friday morning, Baker Hughes released its rig count data.  According to the report, the US rig count is up by 1 to 737, an increase of 352 from this time last year.  In Canada, the rig count dropped by 11 to 96 this week, up 38 from this time in 2016.

Earlier in the week, data from the US Energy Information Administration showed US production rose by 1.1 million b/d to 9.5 million b/d in the week ending Oct. 20.


Posted in: Energy Financial

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