Oil lodges third straight monthly jump as OPEC extends curbs

By Jessica Summers on 11/30/2017

NEW YORK (Bloomberg) -- Oil posted its longest streak of monthly gains since early 2016 after an OPEC-led coalition of major crude producers followed through on a long-awaited extension of supply cuts.

Futures were poised to finish November with a 5% gain in New York. The price was little changed on the day after the Organization of Petroleum Exporting Countries reached a deal with allies such as Russia on Thursday to extend output curbs to the end of next year. The accord involves nations that pump roughly 60% of the globe’s crude.

“The market is getting most of what it expected,” Rob Haworth, who helps oversee $150 billion in assets at U.S. Bank Wealth Management in Seattle, said by telephone. “Even though they are extending, they are doing it cautiously.”

Oil has rallied about 18% since the last time producers gathered for an official meeting back in late May. OPEC has “come a long way” toward eroding a worldwide oil glut, Saudi Arabia’s Energy Minister Khalid Al-Falih said before start of the producer meeting in Vienna. “We must continue to work in unison and stay the course,” he said at the beginning of Thursday’s meeting. An exit strategy won’t be discussed before the third quarter, according to Al-Falih.

Two important suppliers that were exempt from the first round of output limits -- Libya and Nigeria --- have agreed to a collective cap, Iranian Oil Minister Bijan Zanganeh said. Although delegates said the cartel agreed to review the deal at its next meeting in June, Zanganeh said that wasn’t the case. 

West Texas Intermediate for January delivery slipped 7 cents to $57.23/bbl at 11:54 a.m. on the New York Mercantile Exchange after earlier falling to as low as $56.82/bbl.

Brent for January settlement, which expires Thursday, rose 32 cents to $63.43 on the ICE Futures Europe exchange. Brent traded at a premium of $6.22 to January WTI. The more-active February contract declined 19 cents to $62.34.

“It’s not a clean nine-month extension, so that’s going to hurt their efforts, at least price-wise in the short-term,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said in a telephone interview. “It appears they are going to revisit everything here in June.”’

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