Oil holds near $69 as nations say output cuts will continue

Bloomberg

Brent crude steadied after Saudi Arabia and Russia pledged to continue supply cuts. Futures rose as much as 0.5 percent in London before paring those gains. Output limits should remain through 2018 as rebalancing may be achieved next year, Saudi Arabia’s Energy Minister Khalid Al-Falih said in a Bloomberg television interview held with his Russian counterpart.
Russia is prepared to cooperate with OPEC after the current curbs expire, Energy Minister Alexander Novak said. Neither minister said if the cuts would continue in 2019.
Benchmark Brent has eased after supply curbs by the Organization of Petroleum Exporting Countries and its allies to reduce a global glut pushed prices above $70 for the first time since December 2014. Banks including Citigroup Inc. and JPMorgan Chase & Co. predict the coalition may begin winding down cuts from the middle of the year, before a scheduled end in December, as the market rebalances. There was no sign of such a move at this weekend’s meeting between OPEC members and some of their allies in Oman.
“We already knew that the Saudis would like to have more permanent cooperation in the oil market,” says Torbjorn Kjus, chief oil analyst at DNB Bank ASA. “Al-Falih wants more stability and more control over the oil market.” Brent for March settlement was at $68.63 a barrel on the London-based ICE Futures Europe exchange, up 2 cents, at 10:22 a.m. in London. The contract closed 1 percent lower at $68.61, falling for a second day. The global benchmark traded at a premium of $5.31 to March West Texas Intermediate.
WTI for February delivery was up 10 cents to $63.47 a barrel on the New York Mercantile Exchange, after falling 1.5 percent last week. Total volume traded was at about 20 percent below the 100-day average. The more-active March contract rose 7 cents to $63.38.
OPEC and its allies see merit in maintaining their output limits into 2019, Oman Oil Minister Mohammed Al Rumhy told reporters before a meeting to assess compliance with the accord. The compliance rate among all participants in 2018 will beat the 107 percent average in 2017, Al-Falih said.
Iraq’s oil minister told reporters in Baghdad that global oil inventories
are falling and that the market will be stable by the end of 2018.