Picture: REUTERS
Picture: REUTERS

London — Oil rose further above $60 a barrel on Wednesday, supported by the expectation that Opec and its partners will next week decide to curb supply and helped by a drop in North Sea output.

Opec plus Russia and other allies meet on December 6-7. Producers are discussing a supply curb of 1-million to 1.4-million barrels a day and possibly more, Opec delegates have said.

Brent crude, the global benchmark, was up 53c at $60.74 a barrel at 9.19am GMT and traded as high as $61.27.

US crude added 41c to $51.97.

“Opec needs to cut if it wants the market to be a little less over-supplied in the first half of 2019,” said Olivier Jakob, analyst at Petromatrix, although he said the rally was limited. “We are not making significant moves.”

Despite Wednesday’s rise, Brent has slumped 30% from a four-year high above $86 a barrel in early October, pressured by concerns that supply will exceed demand in 2019 as economic growth slows.

The slump since October is so far on a par with the 2008 price crash and steeper than that of 2014-2015 — both of which prompted Opec to agree output curbs to support the market.

The Opec meeting in Vienna will follow a gathering by the Group of 20 (G20) nations in Argentina this weekend, at which oil policy is expected to be discussed, potentially laying the groundwork for an Opec deal.

The market also gained support from a supply outage in the North Sea, home to the crude underpinning the Brent contract.

The Buzzard oilfield, the UK’s largest, has closed temporarily after the discovery of pipe corrosion. As a result, trade sources said three December cargoes of Forties crude had been cancelled.

“Few would bet against further disruptions,” said Stephen Brennock of oil broker PVM, referring to the impact of the outage on cargo loadings.

A weekly report showing a rise in US crude stockpiles, the 10th consecutive week of gains, limited the rally.

The American Petroleum Institute (API), an industry group, said on Tuesday that US crude stocks rose by 3.5-million barrels, more than analysts had forecast. The government’s official supply report is due later on Wednesday at 3.30pm GMT.

Reuters