Oil Climbs on OPEC Expectations
November 17 2017 - 1:09PM
Dow Jones News
By Stephanie Yang and Christopher Alessi
Oil prices gained Friday after a week of losses, on fresh signs
that Saudi Arabia plans to back an extension of OPEC's deal to curb
global production.
Light, sweet crude for December delivery rose $1.25, or 2.3%, to
$56.39 a barrel on the New York Mercantile Exchange, snapping a
three-session losing streak. Brent, the global benchmark, advanced
$1.27, or 2.1%, to $62.63 a barrel.
On Thursday, Saudi Arabia's energy minister Khalid al-Falih
reiterated the country's commitment to the deal, saying that
further production cuts are necessary to continue rebalancing the
market.
"This isn't a parsed statement, this is clear-cut and pretty
unequivocal, " said John Saucer, vice president of research and
analysis at Mobius Risk Group. "It wiped away doubts."
Many traders are anticipating that the Organization of the
Petroleum Exporting Countries and other major producers will
announce a decision to extend supply cuts past March 2018 after
their meeting in Vienna on Nov. 30.
Following the meeting last year, OPEC agreed to reduce its crude
output in an effort to rein in the supply glut and boost prices,
later bringing in Russia and several other producers outside the
cartel. The deal, which was extended in May, is set to expire in
March. Russia has also indicated a willingness to lengthen the cuts
and is set to participate in the OPEC meeting at the end of the
month.
"It's going to be an OPEC-headline type market for the next two
weeks here," said Bob Yawger, director of the futures division of
Mizuho Securities USA.
Still, some doubts linger over some producers' commitment to the
deal. The high level of speculative long positions in the market
may also put increased pressure on OPEC to come out of the meeting
with an extension agreement, Mr. Yawger said.
"Anything apart from an extension to the end of 2018 is likely
to send the oil price into an immediate tailspin," Commerzbank
analysts wrote.
This week, concerns over increasing output from U.S. shale
producers also re-emerged, raising questions on whether they will
continue to flood the market as other countries pull back.
On Wednesday, the U.S. Energy Information Administration said
U.S. production rose last week to a record weekly high of 9.645
million barrels, while crude stockpiles climbed by 1.9 million
barrels.
That report came a day after the International Energy Agency
revised downwards its global oil demand forecasts for this year and
next.
Gasoline futures rose 2% to $1.7484 a gallon and diesel futures
gained 2.1% to $1.9415 a gallon.
Write to Stephanie Yang at stephanie.yang@wsj.com and
Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
November 17, 2017 12:54 ET (17:54 GMT)
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