Oil Climbs as Equities Recover, OPEC Signals Output Cuts
Oil steadied near the lowest level in two months as a rout in global equity markets abated.
(Bloomberg) -- Oil edged higher as global equity markets rebounded and OPEC signaled it may curb output within months.
Futures advanced 0.8 percent in New York on Thursday, wiping out earlier losses. Stock markets moved higher in the U.S. and Europe, fueled by optimism about what positive profit reports portend for economic growth. Meanwhile, the Organization of Petroleum Exporting Countries indicated it may adjust output limits to prevent a re-emergence of a price-killing glut.
The cartel should expand production to protect “the health of the growth of the global economy,” International Energy Agency Director Fatih Birol said in an interview in London. Without an increase, crude supplies will soon tighten, imperiling economic activity, he said.
"In the last few weeks you’ve seen oil and equities trade almost in lock-step as you go throughout the day," said Josh Graves, senior market strategist at RJO Futures in Chicago. "We’re at a mid-point in oil where there’s a balance between if there’s enough of a supply concern for us to rally back up, or are the equity markets going to continue to roll over."
Despite Thursday’s gain, oil is on track for the worst monthly performance since July 2016 as trade tensions stoked concerns about global energy demand at a time when American crude stockpiles are increasing. International wild cards include the impact of U.S. sanctions on Iranian exports, the collapse of Venezuela’s economy and crude output, and perennial threats to production in West and North Africa.
“There needs to be a driver which can push prices up again and Iran sanctions kicking in might be one of them,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV.
West Texas Intermediate for December delivery added 51 cents to end the session at $67.33 a barrel on the New York Mercantile Exchange. Total volume traded was about 16 percent below the 100-day average.
Brent for December settlement advanced 72 cents to settle at $76.89 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $9.56 premium to WTI.
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--With assistance from Alex Longley and Tsuyoshi Inajima.
To contact the reporters on this story: Samuel Robinson in New York at srobinson145@bloomberg.net;Helen Robertson in London at hrobertson18@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Mike Jeffers, Carlos Caminada
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