Oil climbed as top crude-exporting countries suggest they may extend output curbs beyond this year, adding momentum to a monthly rebound.
Futures in New York posted a 5.4% increase in March, erasing February losses fueled by mounting American stockpiles. Some OPEC producers and allies are considering prolonging efforts to drain a global supply glut up to the middle of next year, Iraqi Oil Minister Jabbar al-Luaibi said at a conference in Baghdad.
“The potential for OPEC to extend their agreement instead of starting to cut it off at the end of the year is a positive development,” said Park City, Utah-based Mark Watkins, who helps oversee $151 billion in assets at U.S. Bank Wealth Management. “It shows OPEC is serious about continuing to have a stable price for oil.”
Crude has rebounded more than 50% since June, with the rally regaining steam this month as geopolitical worries heat up. President Donald Trump’s appointment of John Bolton as national security adviser triggered speculation of renewed sanctions against Iran, OPEC’s third-largest producer.
Meanwhile, the rapid increase in American crude production, which has topped 10 MMbpd each week since early February, has placed a lid on prices that have remained below January’s three-year high of $66.66.
West Texas Intermediate for May delivery gained 56 cents to settle at $64.94/bbl on the New York Mercantile Exchange, with prices posting a third-straight quarterly gain, the longest streak since 2011.
Brent for May settlement, which expires Thursday, added 74 cents to end the session at $70.27/bbl on the London-based ICE Futures Europe exchange. The more-active June contract rose 58 cents to settle at $69.34. The global benchmark traded at a $5.33 premium to WTI. The European bourse, along with Nymex, will be closed for the Good Friday holiday.
At the same energy conference where Iraq’s Al-Luaibi spoke, OPEC Secretary-General Mohammad Barkindo said the group is looking for long-term cooperation with other global producers.
In the U.S., the most recent Energy Information Administration data showed that while crude inventories ticked higher, gasoline supplies shrank. BNP Paribas boosted its 2018 WTI and Brent forecasts amid OPEC’s efforts to balance markets and the geopolitical fallout from tensions between the U.S. and Iran.
“People are focused on the fundamentals of oil and they are very strong right now,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “We are seeing very strong demand for oil around the globe. As refiners come out of maintenance, we are going to be in a very tight marketplace.”