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HONG KONG and LONDON (Bloomberg) -- Oil held steady as U.S. drilling expanded and two OPEC nations signaled the group may phase out production cuts if the market improves by the middle of the year.
Futures were little changed in New York after climbing 2.5% the previous two sessions. Drillers boosted the rig count by two to 751, a three-month high, according to weekly Baker Hughes data Friday. Kuwait said Sunday that OPEC-led output curbs may end earlier than planned if the market balances by June.
While oil has been lackluster this month, it’s heading for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies including Russia extend supply cuts through the end of 2018. The group may draft a strategy in June to end the curbs if the market is no longer oversupplied by then, the UAE’s energy minister said Monday, while Kuwait indicated the cuts could end before 2019.
“If inventories fall a lot now, then the chance increases of OPEC phasing out cuts earlier than they have recently said,” said Jens Pedersen, a senior analyst at Danske Bank A/S. “The market is figuring out which stance to take on this. That said, it’s still a long way until the June review meeting.”
West Texas Intermediate for January delivery was at $57.52/bbl on the New York Mercantile Exchange, up 16 cents, at 9:19 a.m. local time. Total volume traded was about 15% below the 100-day average. Prices earlier spiked to $57.62 as news broke of an explosion in New York.
Brent for February settlement gained 35 cents to $63.75/bbl on the London-based ICE Futures Europe exchange. Prices slid 0.5% last week. The global benchmark traded at a premium of $6.10 to February WTI.
Russia is keen to end output cuts as early as possible, Issam Almarzooq, the Kuwaiti oil minister who was replaced on Monday, said in Kuwait City on Sunday. OPEC will study an exit strategy at its next meeting in June, and prices should remain near current levels in 2018, Almarzooq said.