Oil Reaches One-Year High After Russia Signals Joining Output Cap

Source: Reuters

Brent crude prices rose to their highest in a year on Monday after Russia said it was ready to join a proposed deal to cap oil production in a bid to stem a two-year price slide. 

Global benchmark Brent crude futures reached the highest level since Oct. 12, 2015 at $53.22 a barrel at 1335 GMT, up $1.29 on Friday's close.

U.S. futures also gained ground, reaching a four-month high of $51.10 a barrel.

Russian President Vladimir Putin said an output freeze or even a production cut were likely the only right decisions to maintain energy sector stability.

"Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join," Putin said, speaking at an energy congress in Istanbul.

The Organization of the Petroleum Exporting Countries (OPEC), of which Russia is not a member, aims to agree an output cut by the time it meets in late November. The goal is to cut production to a range of 32.50 million barrels per day (bpd) to 33.0 million bpd.

OPEC's current output is a record 33.6 million bpd.

The news fuelled an oil price rally last week which led to speculators making a record increase in bullish positions on Brent crude prices, latest data from InterContinental Exchange (ICE) showed. [O/ICE]

Saudi Arabia's Energy Minister Khalid al-Falih said on Monday he was optimistic that a global production deal to limit supplies could be reached at an OPEC meeting scheduled for the end of next month.

He also said he would meet Russian Energy Minister Alexander Novak in Istanbul in the coming days to discuss Russia's reaction to last month's agreement, and that a technical committee meeting between OPEC members and non-OPEC countries would take place in two weeks.

"Adding to these doubts is the realisation that certain OPEC countries are demanding to be treated as exceptions," they said, referring to Libya and Nigeria, whose production has been affected by domestic unrest.

Iraq, OPEC's second biggest producer, had already poured cold water on expectations, saying over the weekend that it wants to raise output further in 2017.