Oil jumped more than 2% to its highest in more than three weeks on Monday, topping $52 a barrel after Saudi Arabia and Russian Federation said that supply cuts need to last into 2018, a step towards extending an Organization of the Petroleum Exporting Countries (Opec)-led deal to support prices for longer than first agreed.
Saudi oil minister Khalid al-Falih said Monday the deal extension would have the same volume allocations that were included in the December agreement.
Oil futures were up in North American trading on Tuesday, with prices headed closer to daily highs reached in the prior session, as investors looked ahead to weekly data from the USA on stockpiles of crude and refined products.
Members of the Organization of Petroleum Exporting Countries agreed in November to cut 1.2 million barrels a day of oil production.
Global crude oil supply inched down by 140,000 barrels daily last month, to 96.17 million bpd, the International Energy Agency said in the latest edition of its Oil Market Report. Between them, Russian Federation and Saudi Arabia produce approximately 20% of the oil consumed by the world every day - about 20 million barrels.
The initial terms of the deal called for a production gap through the first six months of the year with the option for another six-month extension based on market considerations.
However, higher output from the United States, which did not participate in the agreement to cut supplies, has limited the impact of the Opec-led effort. "Year-to-date compliance with production cuts remained robust at 96 percent", said the report.
Supply and demand in the oil market are close to matching up, the IEA said today, but rising U.S. supply could mitigate landmark OPEC-led production cuts.
Oil prices hit a three-week high after the announcement, while shares of oil majors Exxon and Chevron were up 1 percent in premarket trading.
Analysts are expecting Opec to extend the agreement for another six months when the cartel meets later this month, and there appears to be a consensus emerging among nations involved in the original pact to extend the agreement beyond June, according to Saudi Arabia's Opec governor, Adeeb Al-Aama. Nymex crude oil prices have rallied around $6.00 a barrel from the May low. They will present their position to other countries ahead of a meeting between Opec and other producing nations later this month in Vienna.
US shale's favorite financial trick is getting less attractive. US output has risen more than 10% since the middle of a year ago, and data released on Friday by oil services firm Baker Hughes showed that the number of active rigs across the country rose for the 17th week in a row.
- Chelsea Manning Released From Prison
- Iran's top leader urges high turnout in presidential vote
- Lakers Land No. 2 Pick in 2017 Draft
- Kyle Lowry Looking To Move West In Free Agency?
- Boston Celtics shake off Washington Wizards to make National Basketball Association conference finals
- Justin Schultz exits Game 2 after big hit into boards
- Sean Spicer Rebuts Report that Trump Asked Comey to Pledge His Loyalty
- Premier League Betting: Arsenal to get final day victory over distracted Everton
- Stock futures, dollar fall on Trump concerns
- Labour to raise £4.5bn more a year from higher earners