Oil extended gains following a third monthly advance after OPECand Russia agreed to prolong production cuts through to the end of2018 in their fight against a global supply glut.

Futures added 0.8% in New York after rising 0.2% Thursday. Thenine-month extension was strengthened with the inclusion of Nigeriaand Libya, two OPEC members originally exempted from the curbs. Oilstockpiles in developed countries are still 150 million barrelsabove a five-year average, leaving OPEC and its allies with morework to do, Saudi Arabia's Energy Minister Khalid Al-Falih saidThursday.

Saudi Arabia and Russia displayed unprecedented unity in Viennaon Thursday with Al-Falih saying he and his Russian counterpartAlexander Novak stood “shoulder to shoulder.” The show offriendship sought to dispel fears flagged by Wall Street analystsabout Moscow's reluctance to keep its side of the bargain in theabsence of an exit strategy for the deal. Still, the ministers willhave their work cut out as their primary rival, the U.S., expandedoutput to another record last week.

“Yesterday's meeting established a very firm confidence in themarket that the cooperation between Saudi Arabia and Russiaspecifically and their agreement is no fly-by-night and it is hereto stay,” said Bjarne Schieldrop, chief commodities analyst at SEBAB in Oslo. “The downside risk to oil prices was taken away lastevening and a sub-$50 risk for Brent is now gone unless we have aglobal recession.”

West Texas Intermediate for January delivery was at $57.86 abarrel on the New York Mercantile Exchange, up 46 cents, at 12:09p.m. in London. Total volume traded was about 17% below the100-day average. Prices rose 10 cents to $57.40 on Thursday,capping a 5.6% gain for November.

Brent for February settlement climbed 62 cents to $63.25 abarrel on the London-based ICE Futures Europe exchange. The Januarycontract expired Thursday after adding 46 cents, or 0.7%, to$63.57. The global benchmark crude was at a premium of $5.32 toFebruary WTI.

U.S. oil production may climb by another 1 million barrels a daybefore the end of 2018 after the extension of the OPEC-led cuts,according to Barclays. There is a “clear upside risk” to furtheroutput gains if current prices persist, the bank said. The nationpumped 9.68 million barrels a day last week, the highest level inmore than three decades, according to government data.

From: Bloomberg News

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