Oil prices registered their highest settlement in about two months on Thursday, finding support from a report that the Organization of the Petroleum Exporting Countries and its allies are likely to extend production cuts as well as renewed optimism around U.S.-China trade talks.
OPEC and its allies, including Russia, are likely to agree to extend crude production cuts until mid-2020 when they meet next month, Reuters reported Thursday, citing OPEC sources. An existing agreement on output curbs runs through March 2020. OPEC and its allies will meet on Dec. 5 and Dec. 6 in Vienna.
In a note Thursday, Raffi Boyadjian, senior investment analyst at XM, said the oil-producer alliance is expected to agree to extend the current output cap beyond March 2020, and oil prices “got a further boost after Russia signaled it will continue to cooperate with OPEC to restrict output.”
“However, without a significant improvement in the global economic outlook, the OPEC cuts will continue to have a limited impact in lifting prices,” said Boyadjian.
West Texas Intermediate crude for January delivery CLF20, +2.47% rose $1.57, or 2.8%, to settle at $58.58 a barrel on the New York Mercantile Exchange, while January Brent crude BRNF20, -0.28%, the global benchmark, added up $1.57, or 2.5%, at $63.97 a barrel on ICE Futures Europe.
Both front-month benchmark crude contracts posted a second straight climb and marked their highest settlements since Sept. 23, according to Dow Jones Market Data.
“With the market action yesterday and today the bulls are clearly in control,” said Scott Gecas, chief market strategist at The Fox Group. Traders were watching the $58 level for WTI “as resistance that has been tough to break” going back to Sept. 24, he said.
Support for oil was also found after The Wall Street Journal reported that China’s top trade negotiator invited his U.S. counterparts to a new round of face-to-face talks. News reports Wednesday said negotiations had stalled.
Natural-gas futures, meanwhile, only scored a minor boost following data that revealed the first weekly U.S. supply decline of the inventory withdrawal season.
December natural gas NGZ19, +0.98% inched up by nearly a penny, or 0.3%, to $2.567 per million British thermal units after trading as high as $2.595.
The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 94 billion cubic feet for the week ended Nov. 8. Analysts expected a fall of 91 billion cubic feet, on average, according to a survey conducted by S&P Global Platts.