The prices of crude oil hit a new 2017 high Monday, continuing a rally fuelled by improving demand and expectations that the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers will extend output cuts.
The International benchmark, Brent crude rose $1.52, or 2.7 per cent, to $58.38 per barrel, surpassing the highest level of the year.
However, the United States West Texas Intermediate crude remained well below its 2017 high, but topped $51 a barrel for the first time in four months.
It was last trading up $1.06, or 2.1 per cent, at $51.72 per barrel.
OPEC and other oil exporters declined on Friday to extend their agreement to limit production in a bid to drain a global glut that has weighed on prices for three years.
The development coincided with an announcement by the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), that it was targeting to grow its oil production capacity to 500,000 barrels per day (bpd) by 2020.
Nigeria had experienced a relief as the meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and Non-OPEC countries in Vienna, Austria extended Nigeria’s exemption from crude oil production cut, thus endorsing the country’s position that the exemption granted it at the November 2016 Ministerial Conference and extended by the May Ministerial Conference should be sustained until it stabilises its crude oil production.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who led Nigeria’s delegation to the meeting, had argued that although Nigeria’s production recovery efforts have made some appreciable progress since October last year, Nigeria is not yet out of the woods.
He noted that even though Nigeria hit 1.802 million barrels per day in the month of August that was not enough justification for a call by some countries for Nigeria to be brought into the fold.
Resurgent production from US shale oil producers, who use advanced drilling methods, has played a major role in delaying the oil market rebalancing.
Higher oil prices this year have encouraged American drillers to pump more, but there are signs the US recovery is slowing.
The number of oil rigs operating in US fields has plateaued recently. A weekly rig count kept by oilfield service firm Baker Hughes fell for the fifth time in six weeks, figures released on Friday showed.
Monthly US oil production figures released earlier this month showed American output ticked down slightly in June to about 9.1 million barrels a day.
Preliminary weekly figures show production at roughly 9.5 million barrels a day in the week through September 15, recovering after a brief dip due to impacts from Hurricane Harvey.
Trader positioning shows the market believes there’s more room for U.S. crude prices to run up.
Hedge funds raised their bullish bets on U.S. crude futures to the highest level in four weeks, the U.S. Commodity Futures Trading Commission reported on Friday. Wagers that oil prices will fall declined for a third straight week, according to the data covering trades through Sept. 19.