Oil prices fell on Friday after Brent rallied to just below $60 a barrel the previous session but support from Saudi Arabia’s crown prince for extending OPEC-led output cuts created a floor. Brent fell 38 cents to $58.92 a barrel by 1215 GMT, after Thursday’s rise to $59.55, its highest since July 2015 and more than 30 percent above its 2017 lows touched in June. U.S. light crude oil was down 28 cents at $52.36 but still 25 percent above its June low. U.S. crude prices have been capped by rising U.S. production. Oil prices have been hovering near their highest levels for this year amid recent signs of a tightening market, talk of an extension of production cuts and tensions in Iraq. Friday’s announcement of ceasefire between Iraqi forces and the Peshmerga from the country’s autonomous northern Kurdish region eased some concerns. “Yesterday we saw the expiry of Brent options, and like last month it pushed up prices near $60 … now it’s just correcting lower,” Olivier Jakob of Petromatrix consultancy said, adding that the market reacted slowly to bullish Saudi comments. Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters on Thursday the kingdom would support extending the output cut in a bid to stabilise oil demand and supply.
“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.
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.
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.