Saudi Arabia has had extensive consultations with Russia over extending supply cuts
Oil held gains above $56 a barrel after surging the most in almost two weeks as Saudi Arabia’s energy minister said OPEC should announce an extension to supply cuts when it meets at the end of the month.
Futures were little changed in New York after rising 2.6 percent Friday. Oil inventories are unlikely to drain to average levels by the time the OPEC agreement expires at the end of March, Saudi Arabia’s Khalid Al-Falih said on Thursday.
The US drill rig count was unchanged at 738 at the end of last week, data Friday from Baker Hughes showed.
Oil eased last week on a weaker demand outlook and as Russia cast doubts on the timing of a decision to extend supply cuts led by the Organization of Petroleum Exporting Countries. Wagers on lower Brent prices rose by the most since June through the week to Nov. 14 amid uncertainty over Saudi Arabia’s push to prolong output curbs.
“It’s a matter of waiting for developments on the supply agreement,” said Ric Spooner, a Sydney-based analyst at CMC Markets. “At least some of the recent rally is based on positioning for the deal to be extended beyond March. Given there has been quite a large rally, the greatest risk is to the downside.”
West Texas Intermediate for December delivery, which expires Monday, added 5 cents to $56.60 a barrel on the New York Mercantile Exchange at 3 p.m. in Hong Kong. Total volume traded was about 52 percent above the 100-day average. Prices declined 0.3 percent last week. The more-active January contract was unchanged at $56.71.
Brent for January settlement lost 18 cents to $62.54 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 1.3 percent last week. The global benchmark crude traded at a premium of $5.84 to January WTI.
Saudi Arabia has had extensive consultations with Russia, Al-Falih said, and he is convinced that the country will be “fully onboard” when a resolution is made.
OPEC will ensure that its exit strategy from the current accord will be a gradual adjustment that prevents the return of any glut, he said.