Oil hits new highs as Opec members calls for output curbs to continue

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Oil reached new highs in London as Opec members called for output curbs to continue, allaying concerns that the recent rally could weaken their commitment.

Brent crude closed above $70 a barrel for the first time in three years after Iraqi oil minister Jabbar al-Luaibi said on Saturday that production curbs had contributed to stability in the market and should remain, echoing comments from Qatar and the United Arab Emirates. The global benchmark had only briefly breached the key level last week.

The comments came as Citigroup, Société Générale, and JPMorgan Chase predicted the coalition of oil producers could begin winding down their intervention from the middle of the year, before its scheduled conclusion in December.

The call to maintain cuts by Iraq “is another sign that the market is going to go up”, Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. “We are seeing supply, globally, really start to tighten.”

Oil is extending a two-year rebound as Opec and its allies reduce supply to drain a global glut. While they have said their historic deal will run until the end of this year, Opec is “very likely to cut short” the pact if markets become balanced, JP Morgan Securities said in a report.

Brent for March settlement rose 39 cents to $70.26 a barrel on the London-based ICE Futures Europe exchange, the highest close since December 2014. Prices climbed 3.3 per cent last week.

The UAE sees no big changes in Opec policy as a result of short-term price fluctuations, energy minister Suhail Al Mazrouei said in Abu Dhabi. – Bloomberg

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