Oil headed for a second weekly gain as the world’s top crude producers are scheduled to discuss extending their pledged output curbs to avert a global glut.
Futures in New York traded near a four-month high, on course for a 4.4 percent weekly advance. OPEC’s secretariat urged producers to continue efforts to prevent a surplus this year, ahead of a weekend gathering of the cartel and its allies. A surprise drop in U.S. crude inventories reported on Wednesday added to signs of a tightening market.
Crude has rallied almost 30 percent this year as the Organization of Petroleum Exporting Countries and its partners — known as OPEC+ — cap output. Involuntary production declines from nations including Venezuela and Iran have further squeezed supplies. Still, lingering concerns over record output in the U.S. and its prolonged trade tiff with China continue to weigh on prices.
“OPEC’s strategy of reducing the supply to tighten the oil market and thus achieve higher prices is working so far,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Only time will tell whether this strategy will also be successful in the longer term.”
West Texas Intermediate for April delivery climbed as much as 34 cents to $58.95 a barrel on the New York Mercantile Exchange, and traded little changed at $58.57 as of 10:36 a.m. London time. The contract rose 35 cents to $58.61 on Thursday, the highest since Nov. 12.
Brent for May settlement slipped 16 cents to $67.07 a barrel on the London-based ICE Futures Europe exchange. The contract is up 2 percent this week, after closing 32 cents down at $67.23 on Thursday. The global benchmark crude traded at an $8.21 premium to WTI for the same month.
The March 17-18 meetings in Baku, Azerbaijan, will be the first ministerial gathering of the OPEC+ alliance after Saudi Energy Minister Khalid Al-Falih stressed the need to continue with the production cuts. The deliberations of the coalition’s Joint Technical Committee and Joint Ministerial Monitoring Committee will be followed by another meeting in Vienna next month.
OPEC’s monthly report issued on Thursday slashed forecasts for global oil demand and boosted projections for supplies from non-OPEC countries, particularly in the second half of the year. As a result, the group indicated that a renewed surplus could emerge in the fourth quarter even as planned and involuntary cutbacks trim the group’s overall production.
As the crisis in Venezuela has deepened, the International Energy Agency on Friday issued a pointed reminder that the Saudis and others in OPEC have enough spare crude reserves to make up for a major disruption in the Latin American country.
Meanwhile, growing concerns over a U.S.-China trade war weighed on sentiment in wider financial markets. A meeting between President Donald Trump and President Xi Jinping to sign an agreement to end their trade war won’t occur this month and is more likely to happen in April at the earliest, three people familiar with the matter said.
Other oil-market news: Brent is poised to rally above $70 a barrel in the “ near term,” according to Goldman Sachs Group Inc. analysts. Societe Generale SA boosted crude-price forecasts by $5 for the second and third quarters in 2019, and said Iran and Venezuela represent the biggest upside risks to the market outlook.