Crude headed for its longest run of gains this year as Libya’s biggest oil field suffered another outage while Russia signaled it’s weighing an extension of OPEC-led production cuts.
Futures gained for a fifth day in New York, adding to last week’s 3.2 percent gain following a U.S. military strike on Syria. Libya’s Sharara field halted production just one week after reopening, with the National Oil Corp. declaring force majeure on exports, according to a copy of its decree obtained by Bloomberg. In Russia, Energy Minister Alexander Novak said Friday his ministry had been in talks with oil companies regarding the need to prolong the six-month deal with OPEC.
Support from some members of the Organization of Petroleum Exporting Countries to extend the curbs has sparked a rally above $50 a barrel. The cuts have stabilized the market and Russia will continue to watch inventory levels, but it’s too early to decide whether the pact should be prolonged, Novak said. OPEC nation Libya — which is exempt from the agreement — said Sharara had been pumping 200,000 barrels a day before the latest disruption, according to the NOC. A week earlier, exports were interrupted by a pipeline halt.
“The Libyans are constantly shutting and reopening their fields because of political and technical issues,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts said. “The talk of an extension, strength of the U.S. economy and ongoing minor supply problems like Libya are leading people to think the market will probably be getting tighter.”
West Texas Intermediate for May delivery rose 58 cents, or 1.1 percent, to $52.82 a barrel at 9:29 a.m. on the New York Mercantile Exchange. Total volume traded was about 5 percent above the 100-day average. The contract gained 1.1 percent to $52.24 on Friday, the highest close in a month.
Brent for June settlement climbed 58 cents, or 1.1 percent, to $55.82 a barrel on the London-based ICE Futures Europe exchange after advancing 35 cents on Friday. The global benchmark crude was at a $2.63 premium to June WTI.
Russia, which pledged to trim output by as much as 300,000 barrels a day by the end of this month, will make a decision on prolonging the curbs after “monitoring results in April and May,” according to Deputy Prime Minister Arkady Dvorkovich. Cuts so far haven’t delivered the expected price boost, he said at an Energy Ministry conference in Moscow on Friday. While the nation isn’t a member of OPEC, Russia and 10 other countries joined the group in cutting output from January.
Iraq has halted pipeline flows from the Kirkuk oil field to Turkey for three days while conducting maintenance, though it won’t affect exports from Turkey’s Ceyhan port to international markets, according to a statement from North Oil Co. In the U.S., companies increased the rig count to the highest since August 2015. U.S. drillers targeting crude added 10 rigs to 672 last week, according to data Friday from Baker Hughes Inc. Hedge funds increased bets on higher WTI prices for the first time in six weeks, while wagers on more expensive gasoline rose the most since last year, U.S. Commodity Futures Trading Commission data showed. In the Brent market, hedge funds boosted net longs by the most since December, according to ICE Futures Europe data. Iran reduced light oil pricing for May to customers in Asia, according to an official from state-run National Iranian Oil Co., who asked not be identified because the information is confidential.