Oil rises to as OPEC and Russian Federation say cuts working

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Backwardation signals immediate market strength while contango shows traders prefer to store oil in the hope of fetching a higher price for later delivery.

United States (U.S.) West Texas Intermediate crude for November delivery rose $1.02, or two percent, to $51.68 a barrel, close to highs last seen in May. “The key to further upside is Brent staying over $56.65”. At Wednesday’ session, Brent and WTI were up about 16% for the third quarter – on track to their largest quarterly gain since 2004. Under Germany’s mixed-member proportional voting system, that vaults in well beyond the 5% threshold needed for seats in parliament.

Futures rose as much as 1.4 percent in London to the highest since February 2.

Merkel now needs to work to form a coalition reportedly without the SPD, a process that will likely involve protracted negotiations.

Earlier markets got a jolt when North Korean Foreign Minister Ri Yong Ho said on Friday he believes the North could consider a hydrogen bomb test on the Pacific Ocean of an unprecedented scale, South Korea’s Yonhap news agency reported.

Brent crude is being driven higher as tight distillate supply in Europe and expectations of low USA exports of distillates are making the market look very tight going into winter.

As a result, the price of Brent Crude rose 3.8% to close at $59 a barrel, its highest level since July 2015, but has since continued to rise 0.3% to $59.2 a barrel in early morning trading.

Essam al-Marzouq, Kuwait’s oil minister and chair of the meeting of the Join Ministerial Monitoring Committee, said output curbs had helped cut global crude inventories to their five-year average, according to Reuters, which was Opec’s stated target. Over this time, the travails of petrostates led oil cartel OPEC and other oil-producing countries to eventually agree to do something about the supply glut.

Brent oil prices hovered near 26-month highs, supported by Turkey’s threat to cut crude exports from Iraq’s Kurdistan region as well as signs that market rebalancing is accelerating.

The first, and most important, is that USA crude has to remain at a significant discount to similar grades, given the higher loading and shipping costs.

The fate of the deal after March 2018 will be discussed at a regular meeting in Vienna on November 30.

Elsewhere, in the USA, market participants mulled over data showing the number of oil rigs continued to decline, suggesting a possible tightening in domestic production.

However, the number of USA oil rigs operating, an indicator of future production, fell for the third straight week as a 14-month drilling recovery stalled as companies pared back on spending plans when crude prices were softer.

Among oil products, demand for middle distillates – diesel and jet fuel – has taken the industry by surprise.

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