Oil Set for Best Quarter in Almost a Decade on OPEC+ Supply Cuts

Oil headed for its best quarter in almost 10 years as the OPEC+ coalition’s production cuts and the loss of barrels due to U.S. sanctions on Iran and Venezuela countered a wobbly demand outlook.

Futures rose as much as 1.5 percent in New York. Crude rallied with equities Friday after Federal Reserve Bank of New York President John Williams downplayed the chances of a recession in the world’s largest economy. The market also shrugged off a tweet by U.S. President Donald Trump saying oil prices are “getting too high”.

Oil has clawed back most of its losses in the final quarter of 2018 as Saudi Arabia led the Organization of the Petroleum Exporting Countries and its allies in squeezing supplies to prevent a glut. Whether the U.S. will extend waivers allowing some countries to keep buying Iranian oil is shaping up as a key supply risk, while slowing global economic growth is capping further gains.

“The energy complex has put in a stellar price performance in the first three months of this year,” PVM Oil Associates analyst Stephen Brennock wrote in a report. “The fundamental backdrop is poised to tighten in the coming quarter.”

West Texas Intermediate for May delivery rose 78 cents, or 1.3 percent, to $60.08 a barrel on the New York Mercantile Exchange as of 11:29 a.m. in London. The contract is up 1.2 percent for the week and 32 percent this quarter, on track for the biggest quarterly gain since June 2009.

Brent for May settlement, which expires today, climbed 0.7 percent to $68.54 on the London-based ICE Futures Europe exchange. It’s risen more than 26 percent this quarter, also the most since June 2009. The global benchmark crude was at a premium of $8.55 to WTI.

Trade Talks

New York Fed chief Williams’s comments boosted sentiment as the U.S. and China resumed trade talks. The Trump administration is prepared to keep negotiating with China for weeks or even months to reach a deal that will ensure the world’s second-largest economy improves market access and intellectual-property policies for U.S. companies, White House economic adviser Larry Kudlow said in a speech in Washington.

A lack of clarity on the Iran waiver extensions is generating uncertainty on the supply side. While South Korea requested “maximum flexibility” in renewing the waivers that lapse in early May, the U.S. has reaffirmed its original stance to further strengthen pressure and sanctions against the Persian Gulf nation. Refiners in Japan, which resumed oil purchases from Iran in February, are still not certain about buying crude from there after next month.

Other oil-market news Europe’s biggest oil refinery could halve processing rates early next month if a labor dispute with Royal Dutch Shell Plc isn’t resolved. U.S. State Department Assistant Secretary Francis Fannon has raised questions about Venezuela’s Manuel Quevedo serving as the president of OPEC. Nayara Energy, the Indian oil refiner owned by Rosneft and a consortium led by Trafigura,  boosted purchases of Venezuelan oil in March, according to shipping reports and ship-tracking data compiled by Bloomberg