Crude oil futures surged on Monday, posting their best settlements in more than a year as favorable comments from Saudi Arabia’s energy minister and Russian President Vladimir Putin appeared to set the stage for ensuring a production cap in the near future, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, November West Texas Intermediate crude oil added $1.54, or 3.1%, to settle at $51.35 a barrel, pushing prices to its highest level since July 15, 2015.
Meanwhile, December Brent crude, the global benchmark, jumped $1.21, or 2.3%, to finish at $53.14 a barrel on London’s ICE Futures Exchange. It marks the highest settlement for Brent crude since August 31, 2015.
On Monday, Saudi Arabia’s energy minister Khalid al-Falih said a 20% rally in crude oil prices to $60 a barrel was “not unthinkable,” adding to hopes that OPEC and other major oil producers might be able to intervene to halt a protracted slump in oil prices from 2014 highs amid what has been viewed as a glut of supply, according to the report.
The Saudi energy minister’s remarks came at an Istanbul energy conference that is expected to be the site of informal discussions to further solidify an output freeze, following a tentative pact to freeze output at the International Energy Forum in Algiers struck on September 28. Oil ministers from a host of countries are gathering in Turkey this week for the World Energy Congress.
Falih’s comments also came as Putin said Russia is prepared to work on striking an output freeze agreement or cut production, according to Bloomberg News.
Those comments helped sustain and extend what has been a prolonged rally in oil futures, which re-entered a bear-market territory—defined by a drop of at least 20% from a recent peak—back in August. Since those August lows, oil futures have surged by more than 30%.
“Obviously, the market is starting to take OPEC seriously and when you have Vladmir Putin saying that he will agree to a freeze, if not a production cut, it makes the people who were skeptical about a deal become less skeptical,” said Phil Flynn, senior energy analyst at Price Futures Group.
An extensive agreement on oil isn’t expected until OPEC convenes for its official meeting in Vienna on November 30. A production cap is targeted between 32.5 million and 33 million barrels a day.
Meanwhile, November natural gas futures gained 8.2 cents, or 2.6%, to end trading at $3.2750 per British thermal units on the New York Mercantile Exchange.
