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Oil futures traded higher Thursday on reports that OPEC and its allies have recommended cutting production by 500,000 barrels a day, on top of the current output-cut agreement, ahead of the official gatherings of major oil producers in Vienna over the next two days.
West Texas Intermediate crude for January delivery CLF20, +0.86% on the New York Mercantile Exchange rose 47 cents, or 0.8%, to $58.90 a barrel on the New York Mercantile Exchange. Prices climbed 4.2% on Wednesday to mark the highest settlement for the contract since Nov. 21, according to Dow Jones Market Data.
February Brent crude BRNG20, +1.16% added 469 cents, or 1.1%, to reach $63.69 a barrel on ICE Futures Europe, after surging 3.6% in the previous session.
A committee of oil producers led by Saudi Arabia and Russia recommended on Thursday that the group deepen their current oil production cuts by 500,000 barrels a day, The Wall Street Journal reported, citing officials from the Organization of the Petroleum Exporting Countries. The committee is also pushing for improved compliance from countries such as Nigeria and Iraq, which have not fully met their quota commitments, the report said.
The reduction would come on top of the current agreement between OPEC and its allies, collectively known as OPEC+, which calls for cuts of 1.2 million barrels a day from late 2018 levels through March 2020.
The deal has yet to be ratified by OPEC+, and the group plans to meet in early March to review the deal and potentially extend it, according to a tweet from Herman Wang of S&P Global Platts. OPEC members will hold a closed session meeting Thursday and members will meet with allied non-member producers on Friday.
Speculation over deeper cuts had been growing over the last few days, but there was also talk that the Saudis threatened to boost their own production because other members have failed to fully comply with current output reductions.
Read: Saudi Arabia threatens to boost its oil output, even as it calls for deeper OPEC+ production cuts
The OPEC convention comes as Saudi Arabia completes the initial public offering of a 1.5% stake in energy behemoth Saudi Aramco, which could value the company at around $1.6 trillion, with trading expected on the Saudi Tadawul stock exchange on Dec. 11.
The meeting of OPEC and its allies also comes after the Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 4.9 million barrels for the week ended Nov. 29. That followed increases in each of the past five weeks. Analysts polled by S&P Global Platts forecast a fall of 700,000 barrels. The American Petroleum Institute on Tuesday reported a 3.7 million-barrel decline.
Back on Nymex, January gasoline RBF20, +1.48% tacked on 1.5% to $1.6277 a gallon and January heating oil HOF20, +1.01% rose 1.1% to $1.943 a gallon.
January natural gas NGF20, +2.42% rose 3.6 cents, or 1.5%, to $2.435 per million British thermal units.
The EIA reported Thursday that domestic supplies of natural gas fell by 19 billion cubic feet for the week ended Nov. 29. Analysts expected a fall of 21 billion cubic feet, on average, according to a survey conducted by S&P Global Platts.
