Oil rises to three-month high as investors assess OPEC agreement
NEW YORK (Bloomberg) -- Oil climbed to the highest level in three months in New York as traders continued to assess last week’s change in OPEC policy.
U.S. crude futures rose as much as 1.3% after advancing 8.5% last week. While OPEC outlined an accord to reduce production by as much as 750,000 bopd, its third-largest member Iran wants to increase exports to 2.35 MMbopd in the coming months, state news agency IRNA reported. The OPEC member is currently shipping 2.2 MMbopd. Rigs targeting crude in the U.S. rose a fifth consecutive week to the highest level since February, Baker Hughes said on its website Friday.
Oil capped the biggest monthly gain since April after the Organization of Petroleum Exporting Countries agreed to trim supply for the first time in eight years. While quotas will be decided at the group’s official meeting in November, Nigeria and Iran have said they are exempt and Iraq has said it doesn’t accept OPEC’s estimates of its production levels. Russia boosted output last month to a post-Soviet record.
“The real significance of last week’s framework OPEC production agreement is not the size of the implied or actual output cut, but the fact that Saudi Arabia and OPEC have returned to active market management,” said Mike Wittner, head of oil market research at Societe Generale SA. “It is difficult to overstate the importance of this change.”
West Texas Intermediate for November delivery rose as much as 63 cents at $48.87/bbl on the New York Mercantile Exchange, the highest since July 5, at traded at $48.67 at 9:29 a.m. London time. The contract gained 41 cents to $48.24 on Friday. Total volume traded was about 7% below the 100-day average. Prices rose 7.9% in September.
Brent for December settlement was 52 cents higher at $50.71/bbl on the London-based ICE Futures Europe exchange. The November contract fell 18 cents to expire at $49.06 on Friday, while the December contract closed at $50.19. The global benchmark traded at a $1.45 premium to December WTI.
U.S. drillers added seven oil rigs during the week ended Sept. 30, increasing the count to 425, according to Baker Hughes. The U.S. is pumping at a rate of 8.5 MMbopd, weekly data from the Energy Information Administration show.
