Oil close to four-month highs on OPEC-led output cuts, U.S. stock draw

By Laila Kearney

NEW YORK (Reuters) - Oil prices rose to around four-month highs on Monday, aided by the prospect of prolonged OPEC-led oil supply curbs and signs of inventory declines in U.S. crude stockpiles.

Brent crude futures settled at $67.54 a barrel, rising 38 cents, or 0.6 percent. The international benchmark held near its 2019 peak of $68.14 reached on Thursday.

U.S. West Texas Intermediate crude settled at $59.09 a barrel, adding 57 cents, or 1 percent, after hitting a four-month high at $59.23.

The Organization of the Petroleum Exporting Countries and its allies met in Azerbaijan to monitor their crude supply reduction pact, where they said they would exceed commitments in the coming months.

“The chatter out of the OPEC meeting was sufficiently supportive to get us going,” said John Kilduff, a partner at Again Capital LLC in New York.

The group also cancelled their April meeting, meaning the producer group known as OPEC+ will not meet again until June.

Saudi Arabia on Sunday signalled producers may need to extend the 1.2 million barrels per day of curbs past June into the second half of 2019.

Saudi Arabia has in general been cutting more dramatically than some other nations, while Russia, the largest non-OPEC member in the pact, is less enthused about continuing production cuts.

“As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market towards balance,” said Saudi minister Khalid al-Falih.

Brent has gained more than 20 percent since Jan 1. due to supply cuts led by OPEC and allies, known as OPEC+, as well as U.S. sanctions on Iran and Venezuela.

Signs of falling crude inventory levels at the U.S. storage hub in Cushing, Oklahoma also supported futures, market participants said.

“The two major things are OPEC and talk of a drawdown in inventory,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “That’s raising larger concerns about a tighter market when refineries come out of maintenance season.”

Crude stockpiles at Cushing, the delivery point for WTI, fell 1.08 million barrels in the week to Friday, traders said, citing data from market intelligence firm Genscape.

Overall U.S. crude inventories were forecast to have drawn down last week, the second consecutive weekly decline, a preliminary Reuters poll showed.

Surging oil output in the United States has helped to offset OPEC-led curbs. Analysts at Bernstein Energy said they expect oil demand to rise by 1.3 million bpd in 2019, but a global slowdown could limit growth to below 1 million bpd.

(Additional reporting by Alex Lawler in London and Devika Krishna Kumar in New York; Editing by Marguerita Choy)

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