Oil crosses $50 as investors assess Opec agreement

LONDON: Oil climbed to the highest level in three months in New York as traders continued to assess last week’s change in Opec policy.
Brent for December settlement was 38 cents higher at $50.57 a barrel on the London-based ICE Futures Europe exchange. The November contract fell 18 cents to expire at $49.06 on Friday, while the December contract closed at $50.19. The global benchmark traded at a $1.39 premium to December WTI.
West Texas Intermediate (WTI) for November delivery rose as much as 63 cents at $48.87 a barrel on the New York Mercantile Exchange, the highest since July 5, at traded at $48.63 at 12:01pm London time. The contract gained 41 cents to $48.24 on Friday. Total volume traded was about 10 per cent below the 100-day average. Prices rose 7.9 per cent in September.
US crude futures rose as much as 1.3 per cent after advancing 8.5 per cent last week. While Opec outlined an accord to reduce production by as much as 750,000 barrels a day, its third-largest member Iran wants to increase exports to 2.35 million barrels a day in the coming months, state news agency IRNA reported. The Opec member is currently shipping 2.2 million barrels a day. Rigs targeting crude in the US rose a fifth consecutive week to the highest level since February, Baker Hughes said on its website on Friday.
Oil capped the biggest monthly gain since April after the Organisation of Petroleum Exporting Countries (Opec) agreed to trim supply for the first time in eight years. While quotas will be decided at the group’s official meeting in November, Nigeria and Iran have said they are exempt and Iraq has said it doesn’t accept Opec’s estimates of its production levels. Russia boosted output last month to a post-Soviet record.
“The real significance of last week’s framework Opec production agreement is not the size of the implied or actual output cut, but the fact that Saudi Arabia and Opec have returned to active market management,” said Mike Wittner, head of oil market research at Societe Generale. “It is difficult to overstate the importance of this change.”
Iran could boost output to 4.1 million or 4.2 million barrels a day from 3.7 million currently, yet further increases will take time, Paolo Scaroni, vice chairman of NM Rothschild & Sons and former chief executive officer of Eni, said in a Bloomberg television interview.
Production increases from Iran, Nigeria and Libya offset lower output from Saudi Arabia last month, meaning overall Opec production held steady, according to Vienna-based consultant JBC Energy.