Oil prices increased on Monday, moved higher by comments from Saudi Arabia that cooperation between oil producers who are presently stopping supplies would proceed beyond 2018.
Strong global economic expansion and a decrease in US drilling activity also helped crude, traders mentioned.
Brent crude futures were at $68.89 per barrel at 0315 GMT, up 25 cents, or 0.4 percent, from their last close. Brent on Jan. 15 increased to $70.37, its largest since December 2014.
US West Texas Intermediate (WTI) crude futures were at $63.61 per barrel, rise in 24 cents, or 0.4 percent, from their previous settlement. WTI increased to $64.89 on Jan. 16, also its largest from December 2014.
Saudi Arabia, the world’s greatest oil exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), stated on Sunday that great oil producers were in contract they should proceed cooperating on development after their agreement on supply cuts expires this year.
Khalid al-Falih, Saudi Arabia’s Energy Minister stated in Oman, “There is a readiness to continue cooperation beyond 2018…The mechanism hasn’t been determined yet, but there is a consensus to continue.”
A group of oil producers including OPEC and Russia, the world’s largest crude producer, began to stop production in January previous year to support prices. The contract is set to expire at the end of 2018.
In the United States, refusing drilling activity for new oil production further supported crude.
US drillers cut five oil rigs in the week to Jan. 19, getting the count reduced to 747, energy services organisation Baker Hughes stated on Friday.
Inspite this, the rig count in 2017 and early this year stays much greater than in 2016, resulting in a 16 percent increase in US production since mid-2016, to 9.75 million barrels every day.
Beyond supplies, strong global economic expansion was also supporting oil prices.
US bank Morgan Stanley mentioned over the weekend in a note, “During the last four quarters, the underlying global growth dynamic began to shift… Global growth has become synchronised and accelerated above trend.”
In the recent indicator, Japanese manufacturing sentiment in January increased to an 11-year greater, the Reuters Tankan poll depicted on Monday, focusing the optimism driven by nearly two years of economic expansion.
Despite the well supported market, analysts alerted oil markets had lost some steam since their peak early previous week.
Bernstein Energy stated on Monday that oil inventories might began increasing quickly because of slowdown in request that typically occurs at the end of the northern hemisphere winter.
Bernstein mentioned, “We expect… an end to the strong (inventory) draws we have seen… With the strong correlation between inventories and crude prices, this perhaps means we should expect crude prices to moderate in the near term.”
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