Oil traded near a three-week high on signs OPEC members have made progress toward completing a deal to cut output.
January futures rose as much as 2 percent in New York after the December contract expired 3.9 percent higher Monday. The details of a supply accord will be finalized Tuesday and “everybody is on board,” Nigerian OPEC delegate Ibrahim Waya said in Vienna, where the group is meeting to discuss output quotas ahead of a summit next week. Libyan OPEC Governor Mohamed Oun said Monday that talks had gone well.
Oil has rebounded from an eight-week low on Nov. 14 as members of the Organization of Petroleum Exporting Countries make renewed diplomatic efforts before their Nov. 30 meeting to finalize the supply deal they agreed to informally in September. The group’s plan to trim output for the first time in eight years is complicated by Iran’s determination to boost volumes, a revival of production in Nigeria and Libya, and Iraq’s request for an exemption.
“An OPEC deal is not priced into the market yet, even if the confidence in a deal seems quite high,” said Bjarne Schieldrop, chief commodities analyst at SEB AB bank in Oslo. “I would be very surprised if we don’t see a cut next week and price moving to $55 a barrel.”
West Texas Intermediate for January delivery rose as much as 96 cents to $49.20 a barrel on the New York Mercantile Exchange and was at $48.38 as of 12:13 p.m. London time. The December contract expired Monday after rising $1.80 to $47.49, the highest close for front-month prices since Oct. 28. Total volume traded Tuesday was about 98 percent above the 100-day average.
Brent for January settlement climbed as much as $1.06, or 2.2 percent, to $49.96 a barrel on the London-based ICE Futures Europe exchange. The contract advanced 4.4 percent to $48.90 on Monday, also the highest close since Oct. 28. The global benchmark traded at a 75-cent premium to WTI.
See also: What an OPEC deal could mean for prices
OPEC representatives meeting in Algiers in September proposed limiting output to a collective 32.5 million to 33 million barrels a day. That remains the main proposal being considered, Nigeria’s Waya said. “Everyone knows that the stakes are high,” he said.