Oil edges higher as Saudi-Russia encounter reassures oil bulls

By Jessica Summers on 10/5/2017

NEW YORK (Bloomberg) -- Oil rose the most in a week as the world’s biggest oil exporters, Saudi Arabia and Russia, signaled continued cooperation on efforts to erode a global crude glut.

Futures rose as much as 2% in New York as Saudi King Salman bin Abdulaziz made a historic trip to see Russian President Vladimir Putin. The king expressed a desire to maintain output caps agreed to with Russia and other producers 10 months ago. Meanwhile, drillers in the U.S. Gulf of Mexico began evacuating platforms as a storm approached, just a day after a the government disclosed record-high overseas demand for American crude.

“What we are seeing is Saudi Arabia and Russia singing from the same song sheet, both countries praising the producer-supply restraint,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone.

Though a September rally pushed the benchmark U.S. crude grade into a bull market, some of those gains have been surrendered despite adherence to production limits by the Organization of Petroleum Exporting Countries and allied suppliers. A possible extension of the deal “should be at least until the end of 2018,” Putin said on Wednesday.

West Texas Intermediate for November delivery climbed 93 cents to $50.91/bbl at 10:37 a.m. on the New York Mercantile Exchange. Total volume traded was about 20% below the 100-day average.

Brent for December settlement gained $1.10 to $56.90/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.76 to December WTI.

Cooperation between Saudi Arabia and Russia has “breathed life back into OPEC” and made the kingdom more optimistic about the outlook for oil than it has been for several years, Saudi Minister of Energy and Industry Khalid Al-Falih said at the start of Salman’s visit to Russia.

Oil-market news. TransCanada Corp. has scrapped its Energy East Pipeline and Eastern Mainline projects, oil and natural gas conduits that have faced regulatory hurdles in Canada and stiff opposition from environmental groups. Tropical Storm Nate has formed off of Nicaragua, threatening to inundate Central America, shut oil and gas rigs in the Gulf of Mexico and damage cotton and citrus crops across the U.S. South

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