Brent Oil Near Two-Year High as Saudi Prince Backs OPEC Cuts

(Bloomberg) 

Brent oil traded near the highest level in more than two years as Saudi Arabia’s Crown Prince Mohammed bin Salman backed the extension of OPEC-led output cuts.

Futures slipped 0.6 percent in London, paring the weekly gain to 2.1 percent. The prince said Thursday that “of course” he wanted to prolong the curbs beyond the end of March 2018. OPEC is considering an exit strategy to avoid flooding the market once the agreement finally expires, people familiar with the talks said this week. Total SA’s Chief Executive Officer Patrick Pouyanne said the imbalance between crude supply and demand is finally dissipating.

Brent has gained as speculation mounts that the Organization of Petroleum Exporting Countries will agree at its Nov. 30 meeting to extend cuts made in tandem with allied nations intended to drain a global glut. Oil ministers from Saudi Arabia and Russia will meet Nov. 2 to discuss prolonging the deal, Russian Energy Minister Alexander Novak said Tuesday. Stronger demand will help cut stockpiles this year for the first time since prices slumped in 2014, the International Energy Agency said earlier this month.

“Oil remains buoyed by the solid global growth backdrop and the bullish market mood,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich.

Brent for December settlement was at $58.92 a barrel on the London-based ICE Futures Europe exchange as of 1:15 p.m. in London. Prices rose 1.5 percent to $59.30 on Thursday, the highest close since July 2015. The global benchmark traded at a premium of $6.57to West Texas Intermediate.

See also: Iraq Overtaking Saudi Arabia in Supplying U.S. With Oil

WTI for December delivery lost 28 cents to $52.36 a barrel on the New York Mercantile Exchange. Total volume traded was about 41 percent below the 100-day average. The contract gained 46 cents to close at $52.64 on Thursday, the highest since April. Prices are up 1.7 percent this week.

Prince Mohammed said in an interview with Bloomberg that prolonging the cuts would bring benefits for both OPEC and non-OPEC producers. His comments, which follow Russian President  Vladimir Putin’s provisional backing to an extension, signal that Riyadh and Moscow are ready to prolong their collaboration to reduce oil supply and lift energy prices.

Oil-market news:

Iraq resumed pumping oil from a field in the disputed Kirkuk province, the first sign that output is recovering from last week’s fighting between government troops and Kurdish forces. The U.S., long the world’s largest oil consumer, is on track to leapfrog Nigeria, Angola, Norway and Venezuela at the end of the year and break into the Top 10 of global exporters. Total SA posted the highest earnings from pumping oil and gas in more than two years, illustrating the improving fortunes of an industry that’s endured the deepest downturn in a generation.