An Iranian crude oil supertanker anchored off Singapore. Picture: REUTERS
An Iranian crude oil supertanker anchored off Singapore. Picture: REUTERS

Singapore — Oil prices firmed on Friday on the expectation that Opec and Russia will agree some form of production cuts next week, although swelling US supplies kept markets in check.

International Brent crude oil futures were at $59.81 a barrel at 3.47am GMT, up 30c, or 0.5%, from their last close.

US West Texas Intermediate (WTI) crude futures were up 20c, or 0.4%, at $51.65 a barrel.

Despite the firmer prices, crude oil has lost almost a third in value since early October because of an emerging supply glut following a global surge in production, including from the US, Russia and by the Middle East-dominated Opec.

To rein in the glut, Opec and its main partner Russia are moving closer to an agreement around further production cuts.

ANZ bank said on Friday that oil prices were rebounding “as signs that Opec-plus was moving closer to an agreement around further production cuts”.

The producer group plus non-Opec member Russia will gather on December 6 and 7 in Vienna to discuss output policy.

Before that, the world’s top three producers — the US, Russia and Saudi Arabia — will be part of a meeting of the Group of 20 (G20) industrialised nations in Buenos Aires, Argentina, this weekend.

Part of the glut is swelling supply in the US, where commercial crude oil inventories rose by 3.6-million barrels in the week to November 23 to 450.49-million barrels, according to the Energy Information Administration (EIA). Production remained at a record 11.7-million barrels a day.

Crude reserves increased 6.4-billion barrels, or 19.5%, to 39.2-billion barrels at year-end 2017, marginally higher than the previous record of 39 billion barrels set in 1970, the agency said.

“With fears over excessive supply and worries about falling demand the primary themes weighing on oil markets, the outlook for Brent Crude and WTI remains bearish,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Reuters