Oil headed for its highest settlement in a month as Russia signaled it’s weighing an extension to OPEC-led production cuts, offsetting concern rising U.S. production will exacerbate a global glut.
Futures rose as much as 0.7 percent in New York after advancing 3.2 percent last week following a U.S. military strike on Syria. Russia’s Energy Ministry has been in discussions with oil companies regarding the need to prolong the six-month deal when it expires, Energy Minister Alexander Novak said Friday. In the U.S., companies increased the rig count to the highest since August 2015.
The support from some 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 is too early to decide whether the pact should be prolonged, Novak said. While the nation isn’t a member of OPEC, Russia and 10 other countries joined the group in cutting output from January.
“A six month extension is probably needed given the supply gains seen from those not bound by the agreement,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “We may see a series of rollovers until there is a better balance in the market.”
West Texas Intermediate for May delivery rose as much as 38 cents to $52.62 a barrel on the New York Mercantile Exchange and was at $52.45 at 1:57 p.m. in Hong Kong, on course for its highest close since March 7. Total volume traded was about 4 percent above the 100-day average. The contract gained 54 cents to $52.24 on Friday.
Brent for June settlement climbed as much as 28 cents, or 0.5 percent, to $55.52 a barrel on the London-based ICE Futures Europe exchange. Prices increased 35 cents to $55.24 on Friday. The global benchmark crude was at a premium of $2.58 to June WTI.
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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 supply 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.
U.S. drillers targeting crude added 10 rigs to 672, according to data Friday from Baker Hughes Inc. 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.