Oil Hits Three-Week Highs
By Alison Sider and Christopher Alessi
Oil prices rose to three-week highs Monday on the back of halted production at a Libyan oil field, an unexpected drop in U.S. crude stockpiles and signs that OPEC's commitment to cutting output hasn't wavered.
U.S. crude futures settled up 36 cents, or 0.57%, at $63.91 a barrel the New York Mercantile Exchange. Brent, the global benchmark, rose 19 cents, or 0.28%, to $67.50 a barrel on ICE Futures Europe.
Oil prices have been gaining ground recently, climbing to their highest levels since Feb. 5 after a more-than-12% selloff at the start of the month amid fears of surging U.S. shale production. Investors have remained optimistic: bullish bets by hedge funds and other money managers outnumber bearish ones by 16 to 1, according to the most recent data from the Commodity Futures Trading Commission.
Recent comments by Saudi Arabia's oil minister, Khalid al-Falih, indicating that Saudi Arabia remains committed to cutting output through the end of the year have helped bolster prices.
"Al-Falih's comments reinforced some of the bullish sentiment in the market," said Andy Lebow, senior partner at Commodity Research Group.
Mr. al-Falih's statements that Saudi Arabia's oil production and exports remain muted, as well as his confidence that the production cuts can be phased out next year helped boost prices, Commerzbank analyst said.
Oil prices have been hemmed in by the competing forces of cutbacks by the Organization of the Petroleum Exporting Countries on one side and resurgent U.S. output on the other. OPEC and 10 producers outside the oil cartel, including Russia, have been holding back crude output by 1.8 million barrels a day since the start of last year. The agreement, which is scheduled to last through the end of 2018, helped raise crude prices by more than 50% in the second half of last year.
Also supporting prices, Libya's National Oil Co. on Friday declared force majeure on exports from the el-Feel oil field in the south of the country. The 60,000-barrel-a-day field was shut down and evacuated following a violent protest by a unit of local guards.
"Given the ongoing political situation in the country, production levels may remain volatile," Jan Edelmann, a commodities analyst at HSH Nordbank AG, said of reduced supply out of Libya.
Meanwhile, the U.S. Energy Information Administration said Thursday the amount of crude oil in storage fell by 1.6 million barrels in the week ended Feb. 16. The surprise decline followed weeks of crude inventory builds in the U.S. that, along with rising production, had weighed on prices.
"Total U.S. commercial oil stocks subsequently dipped below the five-year average for the first time in nearly four years," according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
Prices had been wavering between gains and losses earlier in trading Monday before moving higher.
"I think the market is looking for sustainable direction," said Donald Morton, senior vice president at Herbert J. Sims Co., who oversees an energy trading desk. "I think the market's a little ahead of itself -- it had a pretty good rally, and I think it's time to take a breather."
Gasoline futures rose 1.82 cents, or 1.01%, to $1.8267 a gallon. Diesel futures rose 1.65 cents, or 0.84%, to $1.9858 a gallon.
Write to Alison Sider at firstname.lastname@example.org and Christopher Alessi at email@example.com
(END) Dow Jones Newswires
February 26, 2018 16:27 ET (21:27 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.