Por Myra P. Saefong / MarketWatch
Petroleumworld 03 18 2019
Oil futures gained on Monday, with U.S. prices climbing back to their highest finish since November, as OPEC and its allies looked set to continue their crude production cuts until June.
At a meeting on Monday, the Joint Ministerial Monitoring Committee, a production policy monitoring group that includes Saudi Arabia and Russia, said that “overall conformity” with the production cut agreement among the Organization of the Petroleum Exporting Countries and some nonmember allies that began at the start of the year rose to almost 90% in February, up from 83% in January.
OPEC members had agreed to trim 800,000 barrels a day from October's production levels for six months through June of this year, with Russia and other allied producers cutting another 400,000 barrels a day to total 1.2 million barrels in cuts.
On Monday, April West Texas Intermediate crude CLJ9, -0.08% added 57 cents, or 1%, to settle at $59.09 a barrel on the New York Mercantile Exchange — the highest finish since Nov. 12, according to Dow Jones Market Data. WTI tallied a weekly gain of about 4.4% based on the most-active contracts last week.
May Brent crude LCOK9, +0.13% added 38 cents, or 0.6%, to $67.54 a barrel on ICE Futures Europe. The contract rose 2.2% for last week.
The JMMC on Monday also recommended that OPEC forgo its full ministerial meeting in April and instead hold its next meeting on June 25 to make a decision on the production target for the second half of the year. The current production pact expires at the end of June. The JMMC has also scheduled its next meeting for May.
OPEC-plus is not likely to decide whether to extend its oil-production cuts until June, closer to their scheduled expiration, Saudi energy minister Khalid al-Falih said, according to S&P Global Platts . The coalition has already scheduled another meeting over June 25-26 in Vienna.
“The consensus from the bilateral [meetings] I had yesterday and this morning is that April will be premature to make any decisions for the second half [of 2019],” the minister of the de facto OPEC leader told reporters, according to the news report. “It seems there is a consensus building toward making a decision in June [and] we need to reconsider a need for the April meeting.”
On Sunday, OPEC and its allies said they were deepening their production cuts beyond the 1.2 million barrels per day agreed to in December. But Saudi Arabia and Russia appeared to disagree on whether the reductions should be extended into the second half of the year.
Still, the output cut agreement has led to a more than 25% rise in price of Brent oil — the global benchmark — since the year began.
Meanwhile, data on Friday from Baker Hughes BHGE, +1.18% showed that the number of active rigs drilling for oil in the U.S. , a key metric of activity in the sector, fell for a fourth straight week, though it was down by just one to 833 this week.
On Monday, the Energy Information Administration said in a monthly report that oil production from seven major U.S. shale plays is forecast to climb by 85,000 barrels a day in April to 8.592 million barrels a day.
Back on Nymex, April gasoline RBJ9, +0.15% added 1.4% to $1.883 a gallon, after it was up about 3.1% last week, while April heating oil HOJ9, +0.04% rose less than 0.1% to $1.969 a gallon, after a weekly decline of 1.9%.
April natural gas NGJ19, -0.18% settled at $2.85 per million British thermal units, up 2%, after a loss of 2.4% for last week.