Oil prices go up after Iraq hints at OPEC cut extension

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Oil prices rose on Wednesday after Iraq’s oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in US inventories.

US West Texas Intermediate (WTI) crude futures CLc1 were up 34 cents at 49.82 US dollar per barrel at 0018 GMT. On Tuesday, the contract declined 43 cents to 49.48 US dollars.

Brent crude futures LCOc1 were 24 cents higher at 55.38 US dollars. They settled down 34 cents at 55.14 US dollars per barrel the previous session, not far off a five-month high of 55.99 US dollars.

A worker checks valves at the Al-Sheiba oil refinery in the southern Iraqi city of Basra on January 26, 2016. /VCG Photo

While options being considered by the Organization of the Petroleum Exporting Countries and other producers include an extension of cuts in output by months, it is premature to decide on what to do beyond March, when the agreement expires, Iraqi oil minister Jabar al-Luaibi told an energy conference in the United Arab Emirates on Tuesday.

OPEC and producers including Russia have agreed to reduce output by about 1.8 million barrels per day until March 2018 in a bid to reduce global oil inventories and support prices.

Some producers think the pact should be extended for three or four months, others want an extension until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.

Nigeria’s oil minister and the head of Libya’s state oil company are likely to attend a meeting between OPEC and non-OPEC nations on Friday, two OPEC sources said.

Both are exempt from the deal to curb output and their resulting boost to production has weighed on prices. This has prompted more talk about including Libya and Nigeria in the pact.

Meanwhile, US crude stocks rose last week while gasoline and distillate stocks decreased, data from industry group the American Petroleum Institute (API) showed on Tuesday.

Crude inventories rose by 1.4 million barrels in the week to September 15 to 470.3 million, compared with expectations for an increase of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, and delivery hub rose by 422,000 barrels, API said.

Official figures on stockpiles and refinery runs will be released by the US Department of Energy later on Wednesday.

Source(s): Reuters