Published: Mon, October 30, 2017
Economy | By Melissa Porter

Oil price high as Brent Crude hits $60 a barrel

The increase in the oil price comes after Saudi Arabia and Russian Federation declared their support for extending a global deal to cut oil supplies for another nine months.

Meanwhile, WTI crude, the USA benchmark, rose 2.2 per cent to $53.81, a six month high.

US crude output rebounded to more than 9.5 million barrels a day as the impact from Tropical Storm Nate receded.

But the outlook has shifted in recent weeks, with oil prices posting weekly gains three weeks in a row.

Both the global benchmark and its USA counterpart have rallied in October amid increasing belief that Opec will agree to cut output later into next year, helping to work down global inventories. Near-term Brent prices are higher than prices for oil delivered in future months, a market structure that indicates tighter supplies available for immediate delivery.

"If you look at the economics on most of the big Permian players, not many of them make a lot of money", Taylor said, referring to the oil-rich Permian basin in the United States. Clashes between Iraqi government troops and forces from the semiautonomous Kurdish region disrupted some oil production and exports this month.

"It can't really go above $60" a barrel, Giovanni Staunovo, a commodity analyst at UBS Wealth Management, said of the price of Brent.

It dropped back slightly amid fears the higher price would encourage more USA shale producers to flood the market.

"In 2017 we expect to achieve organic coverage of investments and dividends, entirely paid in cash, at a Brent price of $60 a barrel as planned", CEO Claudio Descalzi said in a statement.

Crude oil prices settled at their highest since March as investors received the strongest signal yet that support for prolonged cuts is growing among Opec members after Saudi Arabia Crown Prince Mohammed bin Salman told Reuters on Thursday the kingdom would support extending output cuts in order to rid the market of excess supplies. Saudi Arabia's Energy Minister Khalid al-Falih said earlier this week that "When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don't have a return to higher inventories".

Gasoline futures rose 1.8 cents, or 1.03%, to $1.7686 a gallon.

U.S. gasoline and heating oil futures contracts rallied after the EIA data showed inventories of gasoline and distillate fuel, which includes heating oil and diesel, both fell by more than 5 million barrels.

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