(Bloomberg) -- Oil held near its highest in almost three months on signs that OPEC+ producers are heading toward a consensus on extending output curbs and on further evidence of tightening supplies in the U.S.
Futures in New York were little changed, after gaining 3.9% on Tuesday to settle at their highest since March 6 -- the day the Saudi-Russian alliance broke down just as a global pandemic dimmed the outlook for demand. OPEC and its allies are edging closer to agreeing to extending production cuts to prop up the market, even as wrangling continued for a third day about whether to bring forward their next meeting.
Deep reductions in output by U.S. shale producers have also helped restore balance to the market. The industry-funded American Petroleum Institute reported that supplies in Cushing, Oklahoma, fell by 2.2 million barrels last week. That would mark the fourth straight weekly decline if U.S. government data confirms the draw on Wednesday. U.S. crude stockpiles fell 483,000 barrels, according to the report.
Yet with the market in a healthier place, the shale industry is already making plans to boost output again. Permian producer Parsley Energy (NYSE:PE) Inc. is turning wells back on just weeks after closing the taps, and producers in North Dakota’s Bakken formation are also easing the rate of shut-ins.
Russian oil prices are surging, offering the country a timely reminder of why it’s helping OPEC and other producers to make the deepest output cuts in history. The country came close to hitting its OPEC+ production target in May, pumping 9.388 million barrels a day. Meanwhile, crude supplies from OPEC’s Middle East exporters, excluding Iran, slumped in May by the most on record to their lowest level since at least January 2017.
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