Hong Kong - Oil extended gains toward $51 a barrel as Saudi Arabia said all producers participating in output cuts agree on prolonging the deal through the first quarter of 2018.
Futures climbed as much as 1.1% in New York after advancing 5.2% last week, the biggest weekly increase since March.
An extension into next year will help producers reach their goal of trimming stockpiles in developed economies to the five-year average, Saudi Arabia’s Energy Minister Khalid Al-Falih said on Sunday. In the US, drillers targeting crude added rigs for an 18th week.
Oil has climbed as Saudi Arabia and non-OPEC member Russia rally support for a nine-month extension to the deal to curb output by the Organisation of Petroleum Exporting Countries and its allies. OPEC and its partners meet in Vienna on Thursday.
“OPEC and some non-OPEC producers are highly likely to maintain cuts for another six to nine months and this is likely to drive global oil inventories down towards normal at the end of 2017,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo.
“But if the US market keeps adding 30 rigs a month till then, production is likely to grow by 2.3 million barrels a day, putting a downside price risk on 2018 and 2019.”
West Texas Intermediate for June delivery, which expires Monday, rose as much as 56 cents to $50.89 a barrel on the New York Mercantile Exchange. Total volume traded was about 19% above the 100-day average. The more-active July contract gained 43c to $51.10 at 12:29.
Brent for July settlement climbed as much as 56c to $54.17 a barrel on the London-based ICE Futures Europe exchange. Prices rose 5.5% last week. The global benchmark crude traded at a premium of $2.95 to July WTI.
Iraq’s Oil Minister Jabbar Al-Luaibi said almost all countries participating in the cut had agreed to extend it, though there was no consensus yet on how long the extension should be.
“Some ministers say nine months, some ministers think six months,” Al-Luaibi said on Sunday in an interview in Jordan. Iraq is OPEC’s largest producer after Saudi Arabia.