LONDON (Bloomberg) — Oil advanced for an eighth day in London, the longest gain since 2012, on confidence Saudi Arabia will support an extension to OPEC-led output cuts just as stockpiles show signs of shrinking.
Brent futures rose 0.6 percent, after rising 6.4% in the previous seven sessions. Saudi Arabia is likely to back prolonging the curbs into the second half of 2017 in an effort to boost prices, according to a person familiar with the kingdom’s internal discussions. Several other countries, including Kuwait, have also expressed public support for an extension. Industry data was said to show U.S. crude supplies fell last week and OPEC’s monthly report said international inventories dropped in February.
While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. In its monthly report on Wednesday, OPEC also boosted estimates for rival supplies as shale drillers emerge from the industry’s two-year slump.
“OPEC just has to have patience because the markets are rebalancing,” Abhishek Deshpande, chief energy analyst at Natixis SA in London, said in a Bloomberg television interview.
Brent for June settlement was 32 cents higher at $56.55/bbl on the London-based ICE Futures Europe exchange as of 12:06 p.m. local time. Prices increased 25 cents, or 0.5%, to $56.23 on Tuesday. The global benchmark crude traded at a premium of $2.51 to June WTI.
West Texas Intermediate for May delivery was at $53.65/bbl on the New York Mercantile Exchange, up 25 cents. Total volume traded was about 18% below the 100-day average. Front-month prices rose 32 cents to $53.40 on Tuesday, the highest close since March 1. (by Grant Smith, World Oil)