Crude oil headed for its largest third-quarter gain in 13 years as prices rose wednesday after the Iraqi oil minister said the Organisation of Petroleum Exporting Countries (OPEC) and its partners are considering extending or deepening output cuts aimed at reducing a global supply glut.
Crude oil prices advanced to the highest level in months as expectations that OPEC will decide to extend its production-cut deal outweighed pressure from a third-straight weekly jump in the United States crude oil supplies and a hefty rise in production.
US benchmark, West Texas Intermediate crude oil, which expires at the day’s settlement, rose by 1.8 per cent, to $50.35 a barrel on the New York Mercantile Exchange, headed for its highest settlement since late May.
November Brent crude, the global benchmark, advanced $1.05, or 1.9 per cent, to $56.19 a barrel on the ICE Futures Europe exchange, set for the highest finish since mid-April.
Reuters reported that Brent was on course for a rise of nearly 16 per cent this quarter, which would make this year’s performance the strongest for the third quarter since 2004.
OPEC and other producers are considering a range of options, including an extension of cuts, but it is premature to decide on what to do beyond the agreement’s expiry date in March, Iraqi oil minister, Jabar al-Luaibi, told an energy conference last Tuesday.
OPEC and non-OPEC producers including Russia have agreed to reduce output by about 1.8 million barrels per day (bpd) until March to reduce global oil inventories and support prices.
Some producers think the pact should be extended for three or four months, others want it to run until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.
A report from US Energy Information Administration wednesday showed that domestic crude oil supplies climbed by 4.6 million barrels for the week ended September 15.
That is above the forecast for a rise of 2.4 million barrels by analysts surveyed by S&P Global Platts.
The EIA also said total domestic crude oil output rose by 157,000 barrels a day to 9.510 million barrels a day.
Gasoline stockpiles were down 2.1 million barrels for the week, while distillate stockpiles fell to 5.7 million barrels, according to the EIA.
The S&P Global Platts survey forecasts a fall of 800,000 barrels for gasoline and a 1 million-barrel draw for distillates.
Traders have also been eyeing comments from major oil producers as OPEC and non-OPEC participants in the output cut deal are set to meet in Vienna next Friday to review compliance with the agreement.
OPEC and 10 producers outside the cartel, including Russia, agreed late last year to cap production at around 1.8 million barrels a day lower than peak October 2016 levels to help alleviate a global glut of supplies.
The deal was extended in May through March 2018, but has been hindered by both a lack of compliance by some signatories and steady US shale output.