Oil reached new highs in London as Opec members called for output curbs to continue, allaying concerns that the recent rally could weaken their commitment.
Brent crude closed above US$70 a barrel for the first time in three years after Iraqi Oil Minister Jabbar Al Luaibi said on Saturday that production curbs have contributed to stability in the market and should remain, echoing comments from Qatar and the UAE. The global benchmark had only briefly breached the key level last week.
The comments came as Citigroup, Societe Generale, and JPMorgan Chase. predict the coalition of oil producers could begin winding down their intervention from the middle of the year, before its scheduled conclusion in December.
The call to maintain cuts by Iraq "is another sign that the market is going to go up", Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. "We are seeing supply, globally, really start to tighten".
Oil is extending a two-year rebound as Opec and its allies reduce supply to drain a global glut. Though they’ve said their historic deal will run until the end of this year, Opec is “very likely to cut short” the pact if markets become balanced, JP Morgan Securities said in a report.
Brent for March settlement rose 39 cents to $70.26 a barrel on the London-based ICE Futures Europe exchange, the highest close since December 2014. Prices climbed 3.3 per cent last week. The global benchmark crude traded at a premium of $5.40 to March WTI.
West Texas Intermediate for February delivery rose 51 cents to $64.81 a barrel on the New York Mercantile Exchange. Total volume traded was about 51 per cent below the 100-day average. There was no settlement on Monday because of the Martin Luther King holiday in the United States, and all transactions will be booked on Tuesday.
The UAE sees no big changes in Opec policy as a result of short-term price fluctuations, Energy Minister Suhail Al Mazrouei said in Abu Dhabi. Qatari energy minister Mohammed bin Saleh Al Sada told the official Qatar News Agency that the group should only review its supply accord once crude stockpiles return to their five-year historical average.