Oil trades above $56 after surging on Saudi cut-extension plea

Oil held above $56 a barrel after surging the most in almost two weeks as Saudi Arabia’s energy minister said OPEC should announce an extension to supply cuts when it meets at the end of the month

Futures were little changed in New York after rising 2.6 percent Friday. Oil inventories are unlikely to drain to average levels by the time the OPEC agreement expires at the end of March, Saudi Arabia’s Khalid Al-Falih said Thursday. The U.S. drill-rig count was unchanged at 738 at the end of last week, data from Baker Hughes showed.

Oil dipped slightly last week on a weaker demand outlook while Russia cast doubts on the timing of a decision to extend supply cuts led by the Organization of Petroleum Exporting Countries. Wagers on lower Brent prices rose by the most since June through the week to Nov. 14 amid uncertainty over Saudi Arabia’s push to prolong output curbs. Yet an extension remains likely, according to PVM Oil Associates Ltd.

“It is widely believed that OPEC, together with 10 non-OPEC countries, will roll over their production for the whole of 2018,” said Tamas Varga, an analyst at PVM in London.

West Texas Intermediate for December delivery, which expires Monday, slipped 13 cents to $56.42 a barrel on the New York Mercantile Exchange at 11:02 a.m. London time. Total volume traded was about 12 percent above the 100-day average. Prices declined 0.3 percent last week. The more-active January contract dropped 15 cents to $56.56.

To watch interview with Saudi oil minister on OPEC cuts, click here

Brent for January settlement lost 45 cents to $62.26 a barrel on the London-based ICE Futures Europe exchange, after dropping 1.3 percent last week. The global benchmark crude traded at a premium of $5.71 to January WTI.

Saudi Arabia has had extensive consultations with Russia, according to Al-Falih, who said he’s convinced that the country will be “fully on board” when a resolution is made. OPEC will ensure that its exit strategy from the current accord will be a gradual adjustment that prevents the return of any glut, he said.