LONDON – Brent crude prices continued to march higher Monday amid a growing market consensus that OPEC will likely extend its production-cut deal.
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Brent, the global benchmark, was up 0.44% at $56.67 a barrel in London trading, having closed out Friday at its highest weekly settlement of the past eight months, up $1.24 a barrel on the week.
Undergirding the increase is a market that expects the Organization of the Petroleum Exporting Countries to "significantly extend output cuts, or even deepen them," according to Thomas Pugh, commodities economist at Capital Economics.
OPEC and 10 producers outside the cartel, including Russia, first agreed late in 2016 to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices. The deal was extended in May through March 2018.
Over the past few weeks, a number of signatories to the deal have indicated a willingness to hold back production potentially through 2018.
Amid falling oil inventories, "it looks as [if] the market has started to get convinced that the rebalancing is actually happening," Tamas Varga, an analyst at PVM Oil Associates Ltd. said in a note Monday.
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Mr. Pugh said Brent was also being supported by upward revisions to demand expectations, including by the International Energy Agency earlier in September. But he noted demand for U.S. crude appeared to be lower, partly as a result of the aftereffects of Hurricane Harvey.
On the New York Mercantile Exchange, West Texas Intermediate futures, the U.S. standard, were trading down 0.18% at $50.57 a barrel on Monday morning.
The spread between Brent and WTI, which widened to $6.20 by the close of last session, hasn't been as wide since the U.S. lifted its ban on oil exports nearly two years ago, according to analysts at JBC Energy. In a note on Monday, they said they strongly expected the wide spread to result in record crude exports out of the U.S. Gulf Coast. That should narrow the difference between the two crude benchmarks, the analysts added.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 1.08%, at $1.63 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $543.25 a metric ton, up 0.32% from the previous settlement.
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(END) Dow Jones Newswires
September 25, 2017 06:59 ET (10:59 GMT)