Oil shot back up following six weeks of losses as speculation of the Organization of the Petroleum Exporting Countries (Opec) weighing bigger output cuts overshadowed signs of expanding American crude production.
Futures in New York rose as much as 1.5 percent after a 6.2-percent slump last week. With US production at a record, Baker Hughes data on Friday showed working oil rigs rose to the highest in more than three years. The market is recovering after concerns over global oversupply spurred the Opec and its allies to consider reducing output.
Oil’s in a bear market after slipping from a four-year high last month as the US granted surprise waivers for sanctioned Iranian crude. Trade tensions between the world’s biggest economies escalated over the weekend with US Vice President Mike Pence’s attack on China, adding to worries supply may overtake demand. In response to those concerns, Saudi Arabia has said producers may need to cut 1 million barrels a day, while Russian President Vladimir Putin said on Thursday an oil price of “around $70 suits
us completely.”
“Investors currently have their focus on the potential production cuts discussed by Opec and its allies, with Russia talking of $70 level,” said Hong Sungki, a Seoul-based commodities trader at NH Investment & Securities Co. “The market expects Opec to set the direction and play the role of swing producer again even as American production rises.”
West Texas Intermediate (WTI) for December delivery, which expires on Monday, traded at $57.14 a barrel on the New York Mercantile Exchange, up 68 cents, at 12:37 p.m. in Singapore. The contract lost $3.73 last week. Total volume traded was about 5 percent below the 100-day average. The more-active January contract gained 70 cents to $57.38.
Brent for January settlement rose 55 cents to $67.31 a barrel on the London-based ICE Futures Europe exchange. The contract has dropped $3.42, or 4.9 percent, last week. The global benchmark crude traded at a $9.93 premium to WTI for the same month.
The number of working American oil rigs gained by 2 to 888 last week, the highest level since March 2015, Baker Hughes data said. US crude production has been rising, hitting a record in the week ended November 9, according to government data.
Meanwhile, traders are assessing how much output reduction will be agreed when Opec meets in Vienna early next month. The group and its allies are considering cutting production by more than 1 million barrels a day as they’re increasingly worried about the potential for oversupply, people familiar with the matter said.