After two weeks of retreating settlements, crude oil futures rallied on Monday after energy ministers from Saudi Arabia and Russia released a joint statement supporting a nine-month extension of OPEC production cuts, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, June West Texas Intermediate crude surged by $1.01, or 2.1%, to settle at $48.85 a barrel, the highest settlement since April 28.
On the London ICE Futures Exchange, July Brent crude, the global benchmark, gained 98 cents, or 1.9%, to end trading at $51.82 a barrel.
“There seems to be a real commitment about reducing the glut from oil powerhouses that are Saudi Arabia and Russia—the latter being the largest oil producer in the world and the former being the largest exporter,” said Fawad Razaqzada, technical analyst at Forex.com.
Late last year, OPEC and a handful of non-cartel producers, including Russia, agreed to reduce collective daily output by 1.8 million barrels. The latest OPEC production data indicated that stockpiles remain elevated, even as participants have complied with the output quotas.
Speaking at a joint news conference in Beijing, Saudi Energy Minister Khalid Al-Falih said, “the agreement needs to be extended,” possibly to the end of the first quarter of 2018, because the market “will not reach the desired inventory level” by the end of June.
Even if the production cuts are extended at next week’s meeting, the market will continue to be concerned by growing crude production in the U.S.
Meanwhile, natural gas for June lost 2.2% to $3.349 per million British thermal units back on the New York Mercantile Exchange.