Oil markets firm, approximately $70 on expected extension of production cuts

Oil markets were firm on Monday, with Brent crude opening above 60 dollars per barrel on expectations an OPEC-led production cut due to expire next March would be extended.

Brent crude oil futures, the international benchmark for oil prices, were at 60.63 dollars per barrel at 0018 GMT, up 19 cents or 0.3 per cent from their last settlement.

That’s close to their highest level since July 2015 and up more than 36 per cent since their 2017 lows last June.

U.S. West Texas Intermediate (WTI) crude futures were up by 16 cents, or 0.3 per cent, at 54.06 dollars a barrel.

“With strong compliance to OPEC’s production curbs already supporting prices, comments from the Saudi Arabian Crown Prince that suggested the production cut agreement should be extended added to gains,” ANZ bank said on Monday.

The Organisation of the Petroleum Exporting Countries (OPEC) plus Russia and nine other producers have agreed to hold back about 1.8 million barrels per day (bpd) to get rid of a supply glut.

The pact runs to March 2018, but Saudi Arabia and Russia, who are leading the effort, have both voiced their support to extend the agreement.

OPEC is scheduled to meet officially at its headquarters in Vienna, Austria, on Nov. 30.

The confident sentiment is visible in the way financial traders have positioned themselves.

Hedge funds and other money managers raised their bullish wagers on U.S. crude futures and options in the week to October 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

The speculator group raised its combined futures and options position in New York and London by 15,041 contracts to 280,634 during the period.