Oil wavers on a hint that Saudis, Russia may extend curbs into 2019
NEW YORK (Bloomberg) -- Crude futures are little changed, toggling between gains and losses as hints that OPEC may extend its output cuts into 2019 opened concern the curbs may not be working quickly enough.
Russia is prepared to prolong its alliance with the Organization of Petroleum Exporting Countries even after their accord expires at the end of 2018, Energy Minister Alexander Novak said in a Bloomberg television interview. Appearing alongside Novak, Saudi Arabian Energy Minister Khalid Al-Falih said it may be 2019 before supplies sync with demand.
The comments come after crude futures registered a weekly decline last week for the first time in a month on concern higher prices may spur more U.S. shale drilling.
The production limits “are obviously not working all that well if you need that much more time to achieve your objective,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, by telephone. The televised remarks were “an attempt to try and talk up the market but I’m not sure that it didn’t backfire to a degree.”
West Texas Intermediate for February delivery, which expires Monday, rose 6 cents to $63.43/bbl at 12:35 p.m. on the New York Mercantile Exchange. Total volume traded was about 23% below the 100-day average. The more-active March contract added 52 cents to $63.83.
Brent for March settlement climbed 82 cents to $69.17/bbl on the London-based ICE Futures Europe exchange. It traded at a premium of $5.36 to March WTI.
The oil market still isn’t fully re-balanced, though ministers from OPEC and allied producers agreed on Sunday in Muscat that their cuts pact is working, Russia’s Novak said.
Saudi Arabia and Russia “are re-affirming what we already know,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone. Still, with “OPEC continuing to manage supply and balance the markets long-term, that’s positive for the barrel.”
Meanwhile, in the U.S., crude stockpiles are estimated to have shrunk by 2 MMbbl last week, according to the median estimate of analysts surveyed by Bloomberg. That would be a 10th straight week of declines in the midst of refinery maintenance that typically lasts through March.
“Seasonally, you usually don’t see inventories fall,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone. “This is your big build season for crude. If you continue to see falling refinery activity and falling inventories, that’s pretty important.”
