NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Thursday afternoon on strong demand and weekly stock draws for domestic crude and products as well as on renewed hope that major producers overseas may agree to a deeper cut in crude production than had been previously discussed.
"There are two things going on: We'll have OPEC technical meeting tomorrow (Friday) and then on Saturday we'll have OPEC and non-OPEC meeting, and they are dropping hints that they could cut production by as much as 4%," said analyst Phil Flynn at Price Futures. "We probably will come back on Monday after they announce details of the agreement over the weekend. That's why the market turned around to push above $50, but pared the gains and settled below $50 because of a strong dollar."
Reuters reported that Arab Gulf States allied with Saudi Arabia, which has been pushing for the supply agreement, were willing to cut their output by 4%.
Iraqi Oil Minister Jabbar al-Luaibi also reportedly softened his stance Thursday, saying Baghdad was now willing to compromise so that a deal by the Organization of Petroleum Exporting Countries to cut production can be ratified next month.
Al-Luaibi earlier this week sought an exemption from production cuts called for by the agreement reached Sept. 28 in Algiers, which would curb output by OPEC to a 32.5 million to 33.0 million bpd range because its quota allocation was smaller than it wanted. However, after a meeting with OPEC officials Tuesday through Wednesday, Luaibi said that Baghdad wants to be part of the solution, and would lend its support for approving the deal on Nov. 30 during OPEC's biannual summit in Vienna. Bloomberg News reported that Iraq would accept a quota allocation of 4.7 million bpd.
OPEC had initially proposed a 4.455 million bpd quota for Iraq based on its September production rate provided by secondary sources, while Baghdad wanted a 4.775 million bpd quota based on its self-reported output rate for September.
At settlement, NYMEX December West Texas Intermediate crude oil futures climbed 54cts to $49.72 bbl. IntercontinentalExchange December Brent futures rose 49cts to $50.47 bbl.
NYMEX November ULSD futures settled 1.90cts higher at $1.5701 gallon and the November RBOB futures contract settled up 0.40cts to $1.4871 gallon.
Domestically, the Energy Information Administration reported Wednesday that total U.S. petroleum stocks tumbled 8.7 million bbl last week while total products supplied over the last four-week period averaged 20.4 million bpd, up 4.3% from the same period last year.
George Orwel can be reached at email@example.com
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