Oil prices extend gains on expected Opec-led supply cuts
Brent benefits from an order that Canadian producers scale back output until excess crude in storage is reduced
Singapore — Oil prices rose on Tuesday, extending strong gains from the previous day amid expected Opec-led supply cuts and a mandated reduction in Canadian output.
The 90-day truce in the trade dispute between the United States and China was also still supporting markets, traders said.
US West Texas Intermediate (WTI) crude futures were at $53.35 a barrel at 1.37am GMT, up 40c, or 0.8%, from their last close.
International Brent crude oil futures were up 40c, or 0.7%, at $62.09 a barrel.
Both crude benchmarks climbed by about 4% the previous session after Washington and Beijing agreed a truce in their trade disputes and said they would negotiate for 90 days before taking any further action.
The Middle East dominated Opec will meet on December 6 at its headquarters in Vienna, Austria, to agree a joint output policy.
It will also discuss policy with non-Opec production giant Russia.
“We expect Opec to follow suit and agree to a production cut in Vienna this coming Thursday,” US bank Goldman Sachs said in a note to clients.
“A cut in Opec and Russia production of 1.3-million barrels a day will be required to reverse the ongoing counter-seasonally large increase in inventories,” the bank said.
It added that it expected a joint effort by Opec and Russia to withhold supply to push Brent oil prices “above the mid-$60 a barrel level”.
An order on Sunday by the Canadian province of Alberta for producers to scale back output by 325,000 barrels a day until excess crude in storage is reduced is helping Opec in its efforts to rein in emerging oversupply.
Opec’s biggest problem is surging production in the US, where output has grown by about 2-million barrels a day in a year to more than 11.5-million barrels a day.
China in November resumed imports of US crude oil, taking in one tanker at the end of last month, according to ship-tracking data, with another on order for delivery in January.
Britain’s Barclays bank pointed out that production in the state of Texas alone “reached 4.69-million barrels a day in September, compared with Iraqi output of 4.66-million by our estimates”.
Iraq is Opec’s second-biggest oil producer, behind only Saudi Arabia.