Crude oil prices at the international market have hit a more than two-year high after major producers said the global market was on its way toward rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.
The November Brent crude futures contract was up $1.51, or 2.5 per cent, at $58.37 a barrel, its highest since July, 2015.
United States (U.S.) West Texas Intermediate crude for November delivery rose $1.02, or two percent, to $51.68 a barrel, close to highs last seen in May.
“It’s all driven by the idea that the production cut is starting to work and the rebalance is underway,” said Gene McGillian, director of market research at Tradition Energy in New York.
Even as both contracts rallied, concerns about U.S. production growth weighed on WTI, widening the spread between the two, he said.
The discount of the WTI to Brent futures widened to $6.61, the widest since August 2015.
The Organisation of the Petroleum Exporting Countries (OPEC), Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the begining of this year, helping to lift oil prices by about 15 per cent in the past three months.