Jubilation as oil price heads higher

Jubilation as oil price heads higher

The agreement was then extended in May of this year for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices.

Brent crude closed at a 27-month high on Friday over comments from Saudi Arabia that signal the likely extension of supply cut deal by OPEC and Non-OPEC members, as data released by the World Bank projected growth in oil price by 2018.

The sudden increase in crude prices was attributed to Saudi Arabia voicing support for the extension of an OPEC production cut, according to analysts.

Brent futures rose $1.14, or 1.9 percent, to settle at $60.44 a barrel after hitting a session peak of $60.53, the highest since July 2015 and more than 35 percent above 2017 lows touched in June. West Texas Intermediate crude rose $1.17, or 2.2 percent, to $53.81 a barrel on Friday, near a almost eight-month high.

For the week, Brent was 4.6 percent higher, notching its third straight weekly gain. Now, with the Kingdom cutting more oil production than the OPEC deal calls for, its market share in the US and elsewhere is being lapped up by partners and rivals, including not just Iraq but also Iran and Russian Federation.

Global inventories remain above the five-year average with United States crude adding to existing stockpiles.

Traders say today's move is driven mostly by currency markets, with the dollar whipsawed by a report that Pres. Trump is leaning towards Jerome Powell as the next Fed chairman. We're also seeing record exports at close to 2 million barrels a day, helped by the widening Brent-WTI spread. While demand has yet to catch up to elevated supplies, rebounding economies in Europe and steady economic growth in the USA could at least keep oil prices steady around current levels in the second half of 2017.

Echoing sentiments about a so-called Goldilocks number, Tamas Varga with London oil broker PVM said in an emailed market report that US crude oil production numbers may be the governor on market direction.

Last week, the EIA said, Iraqi exports came in at 1.072 million barrels per day, versus 569,900 barrels per day from Saudi Arabia.

Rising U.S. crude production remains an issue for OPEC as it strives to clear a global overhang.