(AP)
(AP)

Oil set for best quarter in almost a decade on OPEC supply cuts

  • Oil has clawed back most of its losses in the final quarter of 2018 as Saudi Arabia led OPEC and its allies in squeezing supplies
  • Brent crude has risen 27% this quarter, also the most since June 2009

Singapore: Oil headed for its best quarter in almost 10 years as the OPEC+ coalition’s production cuts and the loss of barrels due to US sanctions on Iran and Venezuela countered a cloudy demand outlook.

Futures rose as much 0.7% in New York and are set for a fourth weekly gain. Crude rallied with Asian stocks Friday after Federal Reserve Bank of New York President John Williams downplayed the chances of a recession in the world’s largest economy. The market shrugged off a tweet by US President Donald Trump saying oil prices are “getting too high" to finish up on Thursday.

Oil has clawed back most of its losses in the final quarter of 2018 as Saudi Arabia led the Organization of the Petroleum Exporting Countries and its allies in squeezing supplies to prevent a glut. Whether the US will extend waivers allowing some countries to keep buying Iranian oil is shaping up as a key supply risk, while slowing global growth is keeping the market in check.

Oil’s rally is likely to continue through the second quarter as “the supply side risks are quite substantial," said Daniel Hynes, a senior commodity strategist at ANZ Banking Group Ltd. in Sydney. “The feeling is that the US is unlikely to extend" the Iran waivers, he said.

West Texas Intermediate for May delivery rose 33 cents, or 0.6%, to $59.63 a barrel on the New York Mercantile Exchange as of 12:31 p.m. in Singapore and traded as much as 41 cents higher earlier. The contract is up 1% for the week and 31% this quarter, on track for the biggest quarterly gain since June 2009.

Brent for May settlement climbed 0.4% to $68.09 on the London-based ICE Futures Europe exchange. It’s risen 27% this quarter, also the most since June 2009. The global benchmark crude was at a premium of $8.49 to WTI.

Trade talks

New York Fed chief Williams’ comments boosted sentiment as the US and China resumed trade talks. The Trump administration is prepared to keep negotiating with China for weeks or even months to reach a deal that will ensure the world’s second-largest economy improves market access and intellectual-property policies for US companies, White House economic adviser Larry Kudlow said in a speech in Washington.

“I expect to see a short-term boost to prices if a deal is agreed to between the US and China,' the ANZ’s Hynes said.

A lack of clarity on the Iran waiver extensions is generating uncertainty on the supply side. While South Korea requested 'maximum flexibility' in renewing the waivers that lapse in early May, the US has reaffirmed its original stance to further strengthen pressure and sanctions against the Persian gulf nation. Refiners in Japan, which resumed oil purchases from Iran in February, are still not certain about buying oil from there after next month.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed

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