Crude oil prices extend rally after ministers from OPEC line up to support extending the production cut agreement that pulled markets back from a historic slump. File Photo by Monika Graff/UPI | License Photo
Oct. 30 (UPI) -- Crude oil prices continued to test new highs in Monday trading, supported by a growing consensus that OPEC will extend a production cut agreement in November.
The price for Brent crude oil touched $60 per barrel on Friday, for the first time in years, as rhetoric pointed to a decision by the Organization of Petroleum Exporting Countries to extend a plan to trim production in an effort to balance an oversupplied market.
That rhetoric was confirmed during the weekend by Saudi Arabia's government, which affirmed its "readiness to extend the production cut agreement." On Monday, Suhail al-Mazrouei, the energy minister for the United Arab Emirates, said that while nothing would be decided until the next OPEC meeting in November, extending the agreement was necessary.
The price for Brent crude oil was up 0.35 percent to $60.65 per barrel as of 9:10 a.m. EDT. The price for West Texas Intermediate, the U.S. benchmark, was up 0.2 percent to $54.01 per barrel.
The spread, or difference, between Brent and WTI continues to support higher U.S. crude oil exports, which could offset some of the OPEC effort. Saudi Crown Prince Mohammed bin Salman said during the weekend, however, that "high demand for oil has absorbed the increase in shale oil production."
Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report that "if it were not for U.S. exports surging, prices would be higher than they are."
There may be something of a political risk premium added for commodity prices in Monday trading. Paul Manafort, a former campaign chairman to U.S. President Donald Trump, and Manafort's junior partner, Rick Gates, were indicted Monday on 12 charges as part of the probe into Russian ties to Donald Trump's run for president last year.
The rally may be supported further by U.S. data showing personal spending for September reached $136 billion, an increase of 1 percent from the previous month. As with most financial data from the United States recently, the trend may reflect the increased activity associated with the hurricanes that swept through southern U.S. states and island territories during the quarter.
The rally in crude oil prices could be reaching a leveling point. Stephen Brennock, an analyst with London oil broker PVM, said an emailed market report a slight deceleration in the Chinese economy suggests "China is on the brink of wobble," though some of that pressure may be offset by a surging India.