After the major oil producers said at a meeting in Vienna the global market was well on its way toward rebalancing, the prices of oil rose on Monday to their highest in seven months.
Reaching its highest since February 23, the November Brent crude futures contract was up 35 cents at $57.21 a barrel by 0927 GMT (5.27 a.m ET).
And not far off recent four-month highs was the U.S. crude for November delivery was down 8 cents at $50.58.
Oil prices have been helped to be lifted by about 15 percent in the past three months after production of oil was cut by about 1.8 million barrels per day (bpd) since the start of 2017 by the Organization of the Petroleum Exporting Countries, Russia and several other oil producing nations.
Output curbs were helping cut global crude inventories to their five-year average, OPEC’s stated target said the Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting in Vienna of the Joint Ministerial Monitoring Committee.
Even though other ministers suggested such a decision could be taken before the end of this year, Russia’s energy minister said no decision on extending output curbs beyond the end of March was expected before January.
While the UAE’s energy minister said its compliance to supply cuts was 100 percent, a senior official in Iran’s state oil company said that the nation expects to maintain overall crude and condensate exports at around 2.6 million bpd for the rest of 2017.
Nigeria’s oil minister said that the meeting that the country is pumping below its agreed output cap.
“On the basis of the current IEA estimates, the oil market is more or less balanced in the second half of the year,” said Commerzbank in a note. “For stocks to be reduced any further, however, the oil market would have to show a deficit, so the optimism appears exaggerated.”
The rising U.S. shale oil output has tempered the rise in U.S. oil prices relative to the increase in Brent futures and OPEC’s production cuts have been met with rising U.S. shale oil output.
Noting the widest since August 2015, the discount of the benchmark WTI crude contract to Brent futures rose to $6.65. And as U.S. crude demand has been undermined by hurricane damage to U.S. refineries, this gap has doubled in the last six weeks.
As a 14-month drilling recovery stalled, U.S. energy firms cut the number of oil rigs operating for a third week.
Developments in North Korea were also being eyed by investors. President Donald Trump wants to avoid nuclear war with North Korea, said U.S. Treasury Secretary Steve Mnuchin on Sunday.
(Adapted to Reuters)