Oil Advances as Abu Dhabi Sees $60 Crude on Shrinking Surplus

Oil advanced as Abu Dhabi forecast prices could climb as high as $60 a barrel amid a glut that’s dwindling more quickly than projected.

Futures rose as much as 1.3 percent in New York and London. The global surplus is down to 1.2 million to 1.5 million barrels a day and has contracted faster than expected, Ali Majed Al Mansoori, chairman of the Abu Dhabi Department of Economic Development, said in a Bloomberg television interview.

Oil has surged about 85 percent from a 12-year low earlier this year on disruptions and falling U.S. output under pressure from the Organization of Petroleum Exporting Countries’ policy of producing without limits. Members of the group refrained from adopting a new output ceiling last week, with outgoing Secretary-General Abdalla El-Badri saying that it’s difficult to find a target as Iranian supply rises and significant Libyan volumes are halted.

“The rebalancing process is underway, but we still see some minor surplus in the first half,” said Giovanni Staunovo, an analyst at UBS AG in Zurich. “The journey from an oversupplied to a sustainably balanced oil market is not yet over, in my view.”

West Texas Intermediate for July delivery gained as much as 65 cents to $49.27 a barrel on the New York Mercantile Exchange and was at $49.14 at 9:21 a.m. London time. The contract slid 55 cents to $48.62 on Friday, capping a 1.4 percent weekly decline. Total volume traded was about 39 percent below the 100-day average.

Oil Recovery

Brent for August settlement increased as much as 64 cents to $50.28 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 40 cents to close at $49.64 on Friday. The global benchmark crude was at a 52-cent premium to WTI for August.

The market recovery is on track and a price range of $55 to $60 is possible this year, Mansoori said. Abu Dhabi controls most of the oil reserves in the United Arab Emirates, OPEC’s fourth-largest producer. The U.A.E. holds about 6 percent of world crude deposits.

Oil-market news:

  • Speculators cut their total long and short positions on WTI crude to the lowest since January 2015 before the June 2 OPEC meeting, according to Commodity Futures Trading Commission.
  • Saudi Arabia raised pricing on most oil grades for sale to Asia and the U.S. in July after the nation’s energy minister said demand was robust.
  • U.S. drilling increased from the lowest level in more than six years, according to data from Baker Hughes Inc. on Friday.

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