Oil Prices Turn Corner After WTI Dips Below $45

Futures climbed for a fifth day in NY, extending a 2.1 per cent jump Monday after the Saudi and Russian energy ministers said they favour extending curbs until the end of March.

Crude oil prices surged almost 2.5% to their highest level in two weeks after the world's two biggest producers agreed in principle to extend a deal on output restraint through March of next year.

On Monday, Russian and Saudi energy ministers said in a joint statement that Moscow and Riyadh meant to propose a 9-month extension of the current Vienna agreement on oil output cuts on the existing conditions at the OPEC ministerial meeting in late May.

"The ministers pledged "to do whatever it takes" to reduce global inventories to their five-year average and expressed optimism they will secure support from producers beyond those in the current deal". Global benchmark Brent crude added 1.7 percent to $51.69 on the ICE Futures Europe exchange.

OPEC members agreed in November to cut 1.2 million barrels a day of oil production, and several non-members, including Russian Federation, agreed in December to contribute a combined 600,000 barrels a day of output reductions.

However, the 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

While it was broadly expected that OPEC and Russian Federation would agree to extend the cut, the timing and wording of the statement sent crude prices up more than 1.5 per cent in Asian trading.

The U.S. rig count rose for the 17th week in a row to the highest level since August 2015 last week, implying that further gains in domestic production are ahead.

Meanwhile, on the demand side, the IEA left unchanged its estimates for the worldwide thirst for oil, with demand growth for 2017 expected to be 1.3 million barrels per day.

Oil touched a five-month low of $43.76 a barrel in NY on May 5 amid slower demand growth and rising supply outside OPEC, particularly in the U.S.

"Iraq is with the continuation of a reduction of oil production of OPEC nations and we will push in that direction", Abadi said in a news conference broadcast on state TV. US output has risen more than 10% since the middle of previous year, and data released on Friday by oil services firm Baker Hughes showed that the number of active rigs across the country rose for the 17th week in a row.

  • Zachary Reyes