Oil Extends Rally on Expectations OPEC Will Extend Output Cuts

(Bloomberg) 

Oil extended gains from the highest close in more than two years on signs that OPEC will extend production cuts when it meets at the end of this month.

Futures rose as much as 0.9 percent in New York and are heading for a fourth weekly advance. Analysts including FGE Chairman Fereidun Fesharaki view an extension of the OPEC curbs as a “ done deal,” with the only question being for how long. Separately, Venezuelan President Nicolas Maduro said on Thursday he will seek to restructure the country’s debt, raising expectations that the OPEC member’s dwindling oil production will decline even further.

Oil has advanced more than 15 percent since the beginning of September on signs that global supplies are tightening and the Organization of Petroleum Exporting Countries and allied producers led by Russia may prolong their agreement past the end of March. A decision this month is not certain, according to Russian Energy Minister Alexander Novak.

“One of the key elements is this expectation that OPEC will extend the deal,” said Torbjorn Kjus, an analyst at DNB Bank ASA. While the “base case” is for an extension, “downside risk is building” should ministers unexpectedly decide against it, he said.

West Texas Intermediate for December delivery climbed as much as 49 cents to $54.79 a barrel on the New York Mercantile Exchange and was at $54.69 as of 7:58 a.m. local time. Total volume traded was about 38 percent below the 100-day average. Prices on Thursday gained 24 cents to settle at $54.54, the highest close since July 2015, and are 1.5 percent higher this week.

See also: Big Oil’s Surprisingly Strong Quarter Explained in Five Charts

Brent for January settlement added as much as 53 cents, or 0.9 percent, to $61.15 a barrel on the London-based ICE Futures Europe exchange. The contract rose 0.2 percent to $60.62 on Thursday. Front-month prices are up 0.6 percent this week. The global benchmark traded at a premium of $5.88 to January WTI.

Venezuelan output declined by 230,000 barrels a day in the year to September, according to the latest report by the International Energy Agency. The spiraling economic and political crisis has prompted foreign operators to withdraw workers while funding and power shortages have further hampered production.

Oil-market news:

Venezuela may have to export even more oil to China, Russia since these creditors are the most likely to help out amid the debt restructuring, DNB’s Kjus said. EOG Resources Inc. took the wraps off two new chunks of land in the Permian and in Oklahoma that tack on an estimated 750 million barrels of oil to its portfolio.