Oil rose on Monday as Opec moved closer to a deal to cut output to help support prices and after North Korea said it had conducted its first nuclear test. US crude settled up 20 cents at $59.96 a barrel, well off intraday highs of $61.30 on late profit-taking. London Brent crude gained 71 cents to $60.54.
"The profit taking (happened) because there remains uncertainty about whether or not the cuts will get done," said John Kilduff, senior vice president of energy risk management at Fimat USA.
Ample global fuel stocks have helped send US oil prices more than 20 percent lower since their record-high of $78.40 a barrel in mid-July, pressing Opec to remove oil from the market.
Opec President Edmund Daukoru has sent a letter to cartel members proposing the producer group cut 1 million bpd reduction from actual production levels of around 27.5 million barrels per day (bpd).
Another suggestion within Opec had been to cut from the official 28 million bpd limit. Kuwait's oil minister said late on Monday the group was considering trimming output by 700,000 to 1 million bpd.
Opec is due for a scheduled meeting on December 14, but some members want to hold an emergency session this month. Others prefer to press on with the reduction without a face-to-face meeting. "There is consensus on the cut, but we're still consulting about an emergency meeting," a senior delegate said.
Opec's move would expand on marginal supply cuts announced last month by Nigeria and Venezuela. Saudi Arabia already has moved to cut supplies to its customers, shouldering the biggest burden of Opec's plan. The kingdom will supply around 70 percent of contracted volume to major oil companies, down from around 75 percent in previous months, trade sources said.
North Korea's announcement of its first nuclear test rattled markets as traders feared heightened regional tension and sanctions against the country. "This is the sort of thing that causes tension in the world, and tension is associated with bumps upward in oil prices," said John Vautrain, vice president of energy consultancy Purvin and Gertz in Singapore.
Despite signs that world powers were close to agreeing on sanctions, Tehran insisted on Sunday it would not suspend atomic work, which it says is for peaceful purposes only. The United States, Russia, China, France, Britain and Germany agreed in London on Friday to discuss possible UN Security Council sanctions to punish Iran, Opec's second-biggest producer, for failing to heed demands to halt uranium enrichment.
SINGAPORE: Oil edged higher to $60 a barrel on Monday, as Opec planned to cement a deal to cut production but market fundamentals remained weighed down by high US fuel inventories. US crude rose 30 cents to $60.06 a barrel, after losing 27 cents on Friday. London Brent rose 17 cents to $60.
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