Oil prices hit three-week highs on OPEC deal extension optimism

Oil prices rose in trading on Thursday after Kuwait said it supported extending the OPEC supply cut deal. Repsol photo.

Oil prices up after Kuwait endorsed OPEC deal extension

Oil prices rose for a third straight day to their highest in three weeks after Kuwait said it would support extending the OPEC supply cut deal into the second half of 2017.

Brent crude oil was up by 54 cents to $52.96/barrel by 1:33 p.m., after hitting $53.10 earlier, the highest since March 9.

Click here to watch production manager Dave Kuhnert explain how EndurAlloy™ production tubing has cut Crownquest Operating LLC’s Permian Basin well operating costs and extended well run-times.

US crude was up 84 cents to $50.35/barrel after reaching $50.47 earlier in the day, the highest since March 9.

Along with optimism about the OPEC deal extension, Reuters reports both crude benchmarks rebounded from last weeks drop to four-month lows due to a significant drop in Libyan production after protesters shut down pipelines in the country’s western oilfields Sharara and Wafa.

Kuwait Oil Minister Exxam al-Marzouq said his country was one of a number of nations that would back extending the deal that began on Jan. 1 and involves a number of cartel members and non-members in an effort to reduce the global crude glut.

This month, OPEC members have had 95 per cent compliance with their commitments.

“I see no sign from OPEC and Saudi Arabia that they will not roll over the cut into the second half of the year … the market is about to go from supply surplus to deficit on crude ” Scott Shelton, energy futures broker with ICAP told Reuters.

Other participants in the deal, including Russia have slowly cut production.  Russia has dropped its production by about 200,000 b/d in March, which Energy Minister Alexander Novak says is in accordance with the agreement.

Analysts remain concerned about oversupply as inventories in many parts of the world remain at or, near record highs and as US shale production increases.

The 500,000 b/d Dakota Access Pipeline is expected to be online soon.  The controversial pipeline is expected to hasten a revival of Bakken oil production that had been hard hit by low oil prices.

Brokers say the market seems to be looking for a new trading range.

“There is a significant chance that a short-to-medium-term bottom has been found,” Tamas Varga, analyst at PVM Oil Associates told Reuters.