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Oil surges on Saudi-Russia agreement, Alberta production curb

Oil surges on Saudi-Russia agreement, Alberta production curb

Moscow : Oil rebounded from the biggest monthly loss in a decade after Russia and Saudi Arabia agreed to extend their deal to manage the oil market into 2019 and Canada’s largest oil producing province ordered an unprecedented output cut.

Brent rose as much as 5.3 per cent in London, after prices collapsed more than 20 per cent last month. Russian President Vladimir Putin announced the extension after a meeting Saturday on the sidelines of the Group of 20 with Saudi Arabian Crown Prince Mohammed bin Salman, though Moscow and Riyadh have yet to confirm any fresh output cuts. Oil also gained after Alberta ordered curbs of 325,000 barrels a day in an effort to ease a crisis in the nation’s energy industry and after the U.S. and China agreed to pause new tariffs.

Crude collapsed into a bear market last month on fears over a supply glut after America granted waivers to some nations to keep importing Iranian oil. Traders have been watching closely if the Organization of Petroleum Exporting Countries and its partners will curb output at their meeting this week in Vienna to stabilize prices. While OPEC delegates said the leaders have given their political blessing for an agreement, plenty of work is left, including on the size of any potential output cut.

“While we still need to know by how much OPEC will curb its production, Putin’s comment does clear a barrier for OPEC in stabilizing prices as Russia has been ambiguous about its stance,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul. “At the same time, oil’s being supported by easing trade tensions between the U.S. and China as it’s improving investor sentiment for risk assets.”

Brent for February settlement gained as much as $3.14 (U.S.) to $62.60 a barrel on London’s ICE Futures Europe exchange, and traded at $62.51 at 11:38 a.m. in Seoul. The global benchmark crude was at an $8.64 premium to West Texas Intermediate for the same month. The January contract expired on Friday after declining 1.3 per cent.

WTI for January delivery climbed as much as $2.92, or 5.7 per cent, to $53.85 a barrel on the New York Mercantile Exchange, the highest intraday level since Nov. 23. The contract lost 22 per cent last month. Total volume traded was almost triple the 100-day average.