Oil prices steady above $60 a barrel as cuts extension looks likely

Brent crude futures and West Texas Intermediate up above previous settlement

US oil prices climbed above $70 per barrel on Monday for the first time since November 2014. Sergei Karpukhin / Reuters

Oil markets were stable on Monday, with Brent remaining above US$60 per barrel supported by expectations that an Opec-led production cut due to expire next March would be extended.

Brent crude oil futures, the international benchmark for oil prices, were at $60.40 per barrel at 02.36 GMT, 4 cents above their last settlement but still close to their highest level since July 2015 and up more than 36 per cent since their 2017 lows last June.

US West Texas Intermediate (WTI) crude futures were up by 5 cents, or 0.1 per cent, at $53.95 a barrel.

“With strong compliance to Opec’s production curbs already supporting prices, comments from the Saudi Arabian crown prince that suggested the production cut agreement should be extended added to gains,” ANZ bank said.

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Opec plus Russia and nine other producers have agreed to hold back about 1.8 million barrels per day (bpd) to get rid of a supply glut. The pact runs to March 2018, but Saudi Arabia and Russia, who are leading the effort, have both voiced their support to extend the agreement.

Opec is scheduled to meet officially at its headquarters in Vienna, Austria, on November 30.

While Opec and its partners are withholding supply, US production has risen almost 13 per cent since mid-2016. As a result WTI is trading at a steep discount of around $6.50 per barrel against Brent, which has made US crude exports to the world attractive.

Some analysts were cautious, however, pointing to technical chart indicators.

“We note that both contracts’ [Brent and WTI] relative strength indices are both approaching over-bought levels. This may imply that crude has risen enough in the short term and some consolidation is required,” said Jeffrey Halley, a senior market analyst at futures brokerage Oanda in Singapore.