Brent crude closed at a 27-month high on Thursday as the market focused more on comments from Saudi Arabia about ending a global supply glut instead of an unexpected increase in U.S. crude inventories and high U.S. production and exports.
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Brent futures gained 86 cents, or 1.5 percent, to settle at $59.30 a barrel, its highest close since July 3, 2015.
U.S. West Texas Intermediate crude, meanwhile, rose 46 cents, or 0.9 percent, to settle at a six-month high of $52.64, its highest close since April 17.
With Thursday's gains, Brent futures were up for three days in a row following comments earlier in the week from Saudi Arabia that the Kingdom was determined to end a global supply glut that has weighed on prices for more than three years.
"We are committed to work with all producers, OPEC and non-OPEC countries ... We will support anything to stabilise the oil demand and supply," Saudi Arabia's Crown Prince Mohammad bin Salman told Reuters on Thursday when asked whether the kingdom would support extending an agreement to cut supplies until the end of 2018.
The Organization of the Petroleum Exporting Countries (OPEC), plus Russia and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to March 2018, but they are considering extending it.
"When you couple what Mohammed Bin Salman said along with (Russian President Vladimir) Putin, you have to realize we have two of the largest oil producers basically putting a blessing on an extension of production cuts through the end of 2018," Rob Thummel, a portfolio manager at Tortoise Capital Advisors.
Putin said earlier this month the oil supply deal could be extended to the end of 2018, although OPEC ministers have not given specific commitments on doing so.
"Price volatility in the oil market is expected to persist in the run-up to the November OPEC meeting. Saudi Arabia’s bullish stance, together with ongoing geopolitical tensions in the Middle East, will remain supportive of prices," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London.
OPEC will next meet on Nov. 30 in Vienna.
"However, the market is also mindful of rising oil production in the United States and persistently high exports from the country, which will cap price gains,” Kumar noted.
U.S. crude inventories rose by 856,000 barrels last week, U.S. Energy Information Administration (EIA) data showed on Wednesday, versus analysts' forecast for a 2.6 million-barrel draw.
The data also showed that U.S. crude production rose 1.1 million bpd last week to 9.5 million bpd after a decline due to Hurricane Nate, while U.S. oil exports hit a new record four-week average of 1.7 million bpd.
"We continue to highlight a near record level of crude exports that appears sustainable near 2 (million bpd) through next month due to a widening Brent-WTI spread that pushed above $6 per barrel resistance in yesterday’s trade," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
Brent's premium over WTI
(Additional reporting by Christopher Johnson in London and Osamu Tsukimori in Tokyo; Editing by Marguerita Choy and Adrian Croft)