Oil trades at almost three-year high

An oil drilling rig off the Pacific Ocean coastline, California. Eugene Garcia/ EPA

Oil traded near the highest close in more than three years after Iraq echoed a call by the UAE and other producers that the Opec-led output cuts should continue, despite recent price gains.

Brent for March settlement added 3 cents to US$69.90 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 3.3 per cent last week. The global benchmark crude traded at a premium of $5.49 to March West Texas Intermediate. WTI for February delivery was at $64.43 a barrel on the New York Mercantile Exchange, up 13 cents, at 11am in Hong Kong. Total volume traded was about 5 per cent below the 100-day average. WTI rose 0.8 per cent to $64.30 on Friday, the highest close since December 2014.

“Oil looks comfortable at these levels,” said David Lennox, a commodity analyst at Fat Prophets in Sydney. “Opec compliance remains a big factor to watch. The only headwind to higher prices is rising US production.”

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Futures were little changed in New York after rising 4.7 per cent last week. The curbs have contributed to stability in the market and the caps should remain, the Iraqi oil minister Jabbar Al Luaibi said in Abu Dhabi on Saturday. In the US, drillers added 10 rigs to fields last week, the most in more than six months, according to data from Baker Hughes on Friday.

Oil has extended gains after a second annual advance as Opec and its allies trim supply to drain a global glut. Crude demand will expand by about 1.5 million barrels a day in 2018, Opec secretary general Mohammad Barkindo said at a conference in Abu Dhabi.

The UAE sees no big changes in Opec policy as a result from short-term price fluctuations, the Energy Minister Suhail Al Mazrouei said at the conference.