Oil prices edged lower on Friday, with Brent crude trading just below $60 a barrel buoyed by comments from Saudi Arabia’s crown prince backing the extension of OPEC-led output cuts.
Brent LCOc1 was at $59.17 by 1125 GMT, after Thursday’s rise to $59.55, its highest since July 2015. The contract is more than 30 percent above 2017 lows touched in June.
“Oil raced higher overnight with Brent finishing in sight of the magical $60 a barrel mark, spurred on by Saudi remarks supporting the oil production cut through to the end of 2018,” said Jeffrey Halley, senior analyst at futures brokerage OANDA.
Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters on Thursday the kingdom would support extending the output cut in a bid to stabilize oil demand and supply.
The Organization of the Petroleum Exporting Countries and some non-OPEC producers including Russia have pledged to reduce production by around 1.8 million barrels per day (bpd) until the end of March 2018 to drain a global supply glut.
OPEC is expected to discuss extending that agreement at a meeting in Vienna on Nov. 30.
“If OPEC and their non-OPEC partners can agree to extend their production curtailments through 2018, then we estimate the oil market will remain in modest under-supply until 2019,” U.S. Investment bank Jefferies said.
Oil prices have hovered near their highest for this year in recent weeks amid signs of a tightening market, talk of an extension of production cuts and worries over conflict in Iraq.
Adding support, Iran’s crude and condensate exports are expected to hit a 19-month low this month due to production issues.
“The ingredients are there for the current uptrend to take the European crude benchmark above $60 a barrel,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
However, rising U.S. crude production remains an issue for OPEC as it strives to clear a global overhang.
U.S. crude production C-OUT-EIA rose by 1.1 million bpd to 9.5 million bpd in the week ended Oct. 20, according to U.S. Energy Information Administration (EIA) data.
