Oil leapt more than 1 percent to above $60 a barrel on Thursday, extending its rebound from an eight-month low on a newspaper report that Opec members had agreed informally on the need to slash output by 1 million barrels per day.
US crude jumped 67 cents to $60.08 a barrel. On Wednesday it touched a low of $57.75 a barrel after a surprise build in weekly US crude stockpiles. London Brent rose 56 cents to $59.78, having recovered from a low of $57.70, it's weakest this year. The Financial Times reported on Thursday that the Organisation of the Petroleum Exporting Countries was set to curb output by at least 4 percent in the coming weeks as it defends a price of $50-$55 a barrel for its crudes, with Kuwait, Iran and Libya tightening supplies to join Nigeria and Venezuela, which have announced cuts of 170,000 bpd.
A deal could be ratified at Opec's next meeting in mid-December, the FT said. But the paper added that top exporter Saudi Arabia was unhappy with the broad move towards voluntary cutbacks and would prefer to reach a clear public position when the group meets in the Nigerian capital Abuja.
"Opec is going to defend a price floor for its oil of $50-$55 a barrel," the FT quoted one Opec official as saying. The Opec basket of curds stood at $55.27 a barrel on Tuesday. The report came a day after Kuwait's oil minister said it might take action if prices fall further below $60 a barrel to curb oil's 25 percent price drop from its mid-July peak of $78.40.
Echoing concerns voiced by a string of other Opec members, Saudi Arabia's ambassador to the United States said that there was an abundance of global crude oil supplies and the producer cartel would weigh swelling global inventories when it meets in December.
"The news shouldn't be too much of a surprise. Obviously, Opec has seen that the world economy can keep going at $65 to $75, so they don't see any reason why prices should fall too much further," said Andrew Harrington, a resource analyst at ANZ Bank.
"Based on the market's mild reaction to Opec's noises last week, the sentiment is that the supply picture is just too rosy to start worrying (about cuts)," he added.
US crude stocks rose 3.3 million barrels last week, contrary to expectations for slightly lower inventories, while domestic distillate supplies rose 200,000 barrels, remaining at their highest level since 1999, data showed.
Hefty fuel stocks ahead of winter have helped pull prices lower over the past two months, but geopolitical tensions this week revived fears of potentially large disruptions.
Nigerian militants said on Wednesday they killed 17 soldiers in two separate gun battles in the country's oil heartland and threatened further attacks on strategic oil facilities, such as those operated by Royal Dutch Shell. Nigeria, the world's eighth-largest oil exporter, has already shut in more than a quarter of its output for most of this year because of civil unrest.
Dealers are also keenly watching developments in Iran, the world's fourth-largest oil exporter, whose lengthy stand-off with Western nations over its nuclear programme threatens to come to a head as Tehran refuses to halt uranium enrichment. The European Union warned on Wednesday that Iran was close to triggering sanctions by refusing to halt its nuclear work.
An EU diplomat said foreign ministers of United States, Russia, China, Britain, China, France and Germany were likely to meet in London on Friday or Saturday to assess the outcome of recent negotiations with Iran, and decide on seeking gradual sanctions in the UN Security Council.
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