Oil prices climbed on Thursday after industry sources reported that Russia has agreed for the need for crude output cuts for 2019.   Equinor photo.

Oil prices up over 2 per cent

US oil prices jumped over 2 per cent on Thursday after reports surfaced that Russia is on board with OPEC’s proposed output cuts.

Despite the gains, oil prices are on track for their biggest one-month fall in November since the 2008 financial crisis and are down about 22 per cent so far this month.

By 2:56 p.m., EST, benchmark Brent crude futures were up $.85 to $59.94/barrel, up from a session low of $57.50.  US West Texas Intermediate futures rose $1.25 to $51.54/barrel.

Reuters reports that industry sources say Russia is considering joining the Saudis and other OPEC members in a production cut.  Russia’s Energy Minister Alexander Novak met with heads of Russian oil companies prior to the OPEC meeting in Vienna next week.

“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said a Reuters source familiar with the talks between Russian oil firms and the ministry.

John Kilduff, partner at Again Capital told Reuters that the market now expects OPEC and its allies will agree to a production cut of 1 million barrels per day (b/d).

On Wednesday, Russia’s President Vladimir Putin said he had communicated with OPEC and is ready to agree to continue cooperating on supply, if necessary.  Putin said he is satisfied with oil prices at $60/barrel.

According to data from the US Energy Information Administration, US crude stocks climbed to their highest point this year, and are now only 80 million barrels below March 2017’s record high 535 million barrels.

Data from energy information service Genscape shows US crude inventories are expected to build again in the latest week.

As well, US oil reserves in 2017 topped a 47-year old record when they reached 39.2 billion barrels, according to the US government.

Commodity market investors are looking ahead to the G20 meeting in Buenos Aires this week as the US – China trade war will be in focus.

“We have seen huge increases in supply and the demand picture is in question. However, we might see some movement on global trade issues at the G20 meeting which starts on Friday,” Michael McCarthy, chief strategist at CMC Markets and Stockbroking told Reuters.

Oil prices may also be on the rise due to anticipation of the meeting said John Kilduff.  He added that traders are wary of being short ahead of the summit.