Oil rises after five-day slide as markets rally and OPEC cuts
LONDON (Bloomberg) -- Oil rose for the first time in six days as an OPEC-led committee was said to back prolonging supply cuts and as other markets rallied after the first round of French presidential elections.
Futures climbed as much as 1.2% in New York after slumping 6.7% last week, the first drop in four weeks. A six-month extension to the output-cut deal is necessary, the committee concluded, according to delegates with knowledge of the matter. Equities gained and the dollar weakened against the euro as a snap poll by Ipsos showed centrist Emmanuel Macron would win the second round of voting in France.
Oil had retreated below $50/bbl amid concern rising U.S. crude production would offset efforts by OPEC to trim a global glut. In France, Macron securing a spot in the second round avoids a contest between the anti-European Union Marine Le Pen and the Communist-backed Jean-Luc Melenchon, curbing threats to the euro zone and encouraging investors to embrace more risk.
“The Persian Gulf oil producers provided their strongest hint yet that the current output deal with non-OPEC producers could be prolonged beyond the original June deadline,” said Tamas Varga, an analyst at PVM Oil Associates in London. “It is hard to foresee a further significant fall in prices prior to the upcoming OPEC and non-OPEC meeting.”
WTI for June delivery rose as much as $0.60 to $50.22/bbl on the NYME, and was at $50.09 in London. Total volume traded was about 5% above the 100-day average. Prices closed at $49.62 on Friday, the lowest since March 29.
Brent for June settlement advanced as much as $0.61, or 1.2%, to $52.57/bbl on the Europe exchange. Brent traded at a premium of $2.34 to WTI.
Compliance with supply curbs by OPEC and its allies was 98% in March, an improvement from February, the technical committee concluded, according to a delegate with knowledge of the matter. The committee monitors adherence to the cuts and doesn’t make policy.
The Bloomberg Dollar Spot Index lost 0.6%. A weaker greenback bolsters the appeal of commodities. The Stoxx Europe 600 Index jumped 2.1%.
Oil Market News
U.S. drillers targeting crude added five rigs to oil fields last week, boosting the count to 688, according to data Friday from Baker Hughes. Exxon Mobil won’t be allowed to bypass U.S. sanctions against Russia to resume drilling in a joint venture targeting billions of barrels of Russian crude.
