NEW YORK: Oil closed above US$60 for the first time since early November, capping its best quarter since 2009, amid signs of thinning supplies from Siberia to the US shale fields.
Futures rose 1.4% in New York on Friday as Russian Energy Minister Alexander Novak said the world’s second-biggest producer would deepen the output cuts its imposed along with Opec this year to resurrect the market. In the US, drillers sidelined more drilling rigs for the sixth straight week.
Fears of an economic slowdown eased, meanwhile, as trade talks between China and the US resumed and two Federal Reserve presidents predicted continuing growth this year.
“The Russia situation seemed a bit wobbly yesterday with some of the statements that were coming out of Opec and Russia,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. This morning’s chatter reassured the market’s optimism for the cuts, he said.
After plummeting about 40% late last year, oil has rebounded 32% to start 2019. Russia, Saudi Arabia and other top exporters have squeezed production in response to a growing oversupply, while sanctions against Venezuela and investor pressure on US shale drillers have added to signs of a tighter market.
The next major challenge for crude prices: Whether the US will extend waivers allowing some countries to keep buying Iranian oil, a decision that US President Donald Trump is expected to make in the coming weeks.
“The energy complex has put in a stellar price performance in the first three months of this year,” PVM Oil Associates analyst Stephen Brennock wrote in a report. “The fundamental backdrop is poised to tighten in the coming quarter.”
West Texas Intermediate for May delivery rose 84 cents to US$60.14 a barrel on the New York Mercantile Exchange, its highest level since Nov 19.
It was the biggest quarterly gain for the contract since June 2009. Brent for May settlement, which expires Friday, climbed 57 cents to US$68.39 a barrel on the London-based ICE Futures Europe exchange.
A lack of clarity on the Iran waiver extensions is generating uncertainty on the supply side. While South Korea requested “maximum flexibility” in renewing the waivers that lapse in early May, the US has reaffirmed its original stance to further strengthen pressure and sanctions against Iran.
Refiners in Japan, which resumed oil purchases from Iran in February, are still not certain about buying crude from there after next month.