Oil rose as Opec and its allies were said to plan discussions about fresh production cuts next year, responding to recent increases in oil inventories amid surging US supply.
Futures in New York gained 1 per cent. Ministers from the Organization of Petroleum Exporting Countries gathering in Abu Dhabi this weekend will discuss options for 2019 including the scenario of fresh supply cuts, said delegates. That would mark an abrupt end to six months of supply increases, reflecting the prospect that US sanctions on Iran wont be deep enough to prevent another surge of American shale oil creating a new surplus.
Supply concerns that drove crude to a four year high last month faded on speculation the US would soften the blow of its sanctions on Iran to lower pump prices at home. Opec also pledged to offset any supply gaps. The group led by Saudi Arabia will gather in Abu Dhabi this weekend as they face a fresh surge of US shale oil threatening to unleash a new surplus in 2019.
The market has “more bearish overtones in terms of supply, with American crude output seen rising this year by the most ever,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda.
West Texas Intermediate crude for December delivery advanced 60 cents to $62.81 a barrel on the New York Mercantile Exchange at 6:05 am local time. Total volume traded was 77 per cent above the 100-day average.