Oil prices rose more than $1 a barrel on Monday after Saudi Arabia, Russia, Iraq backed an extension of supply cuts for another six to nine months ahead of an OPEC meeting this week.
Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer
Front-month Brent crude futures for September touched an intraday high of $66.14 a barrel and were up $1.12, or 1.7%, at $65.86 a barrel by 1252 GMT.
U.S. crude futures for August rose $1.10, or 1.9%, to $59.57 a barrel after earlier hitting a peak of $60.10, the highest in over five weeks.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies look set to extend oil supply cuts until at least until the end of 2019 as top producers on Sunday endorsed a policy aimed at propping up the price of crude.
OPEC, Russia and other producers, an alliance known as OPEC+, meet on July 1-2 to discuss supply cuts. The group has been reducing oil output since 2017 to prevent prices from sliding amid a weakening global economy and soaring U.S. output.
Russian President Vladimir Putin said on Sunday he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day (bpd) by six to nine months.
Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.
“While this needs to be ratified by the remaining members of the OPEC+ group, this appears to be a fait accompli,” ANZ analysts said in a note.
Oil prices have come under renewed pressure in recent months from rising U.S. supplies and a slowing global economy.
U.S. crude oil output in April rose to a fresh monthly record of 12.16 million bpd, the U.S. Energy Information Administration said in a monthly report on Friday.
Financial markets were buoyed by a thawing of U.S.-China relationship after leaders of the world’s two largest economies agreed on Saturday to restart trade talks.
Still, analysts remain skeptical that both sides can reach a deal soon.
“Until more details emerge, we are back at square one,” Alfonso Esparza, a senior market analyst at Oanda in Toronto, said in a note.
“The road ahead looks complicated as China demands more equal treatment, and the U.S. is pushing through on intellectual property protection.”
Reporting by Florence Tan; editing by Richard Pullin