MW: Oil climbs with hopes for extension of OPEC-led pact to curb output
Crude-oil prices traded slightly higher Tuesday, lifted by talk of a six-month extension of an OPEC-led pact to limit production.
May West Texas Intermediate crude oil CLK7, +1.09% â€”the U.S. benchmarkâ€”traded 47 cents, or 1%, higher at $48.13 a barrel, after ending in negative territory on Monday. The contract since last Tuesday has been down in four out of the past five sessions, according to FactSet data.
Meanwhile, Brent crude oil for May delivery trading on the ICE Futures exchange LCOK7, +1.10% was up 48 cents, or 0.9%, at $51.37 a barrel.
A growing sense that members of the Organization of the Petroleum Exporting Countries and other non-OPEC members must act soon to maintain the credibility of an agreement that to curb output that ends in June by extending it until the end of 2017.
â€śLower oil prices are going to force OPEC into a decision to extend their production cuts for another six months,â€ť speculated Andy Lipow, president of Lipow Oil Associates, an energy consulting firm established in 2004. WTI crude-oil has been off nearly 13% since touching a high of $54.25 a barrel this year.
On Sunday, representatives from Kuwait, Algeria, Venezuela and non-OPEC nations Russia and Oman met in Kuwait to review the current levels of compliance, with no clear commitment to double down on the production-limit pact. However, members said they would request a review of the agreement in April and consider recommending an extension.
Fear of accelerating output by U.S. shale-oil producers has been among the biggest threats to the upending the global agreement to limit the free flow of crude oil.
â€śThe market is going to continue to be buffeted by pronouncements by OPEC on the one hand and demand and inventories on the other hand,â€ť Lipow said.
Oil prices also got a lift from reports that OPEC member Libya was facing production problems at a halted pipeline, which could support prices.
In exchange-traded funds, United States Oil Fund LP. USO, +0.76% was trading up 0.8%.
Looking ahead, the American Petroleum Institute is due to release its latest supply data on Tuesday.