Oil moves higher, building on 3rd straight week of gains

A general view of the Novokuibyshev Refinery owned by Rosneft oil company on March 15, 2012 in Novokuibyshevsk, Samara region, Russia.
Sasha Mordovets | Getty Images

Oil prices were little changed on Monday as Russia said an OPEC-led producer group may consider easing output cuts next year, offsetting support from some investor optimism that an initial U.S.-China trade deal would be signed soon.

Brent crude was up 28 cents, or 0.4%, at $66.42 per barrel in thin trading ahead of the Christmas holiday. West Texas Intermediate gained 8 cents to settle at $60.52 per barrel.

The Organization of the Petroleum Exporting Countries and other top producing nations led by Russia agreed this month to extend and deepen output cuts in the first quarter of 2020.

However, Russian Energy Minister Alexander Novak said on Monday that the group, known as OPEC+, may consider easing the output restrictions at its meeting in March.

"We can consider any options, including gradual easing of quotas, including continuation of the deal," Novak told Russia's RBC TV in an interview recorded last week, adding that Russia's oil output was set to hit a record high this year.

Non-OPEC global supply is expected to rise next year due to higher output from countries including the United States, Brazil, Norway and Guyana, which became an oil producer last week.

Another source of more oil could emerge in the coming months after Kuwait indicated that a longstanding dispute over the "Neutral Zone" on its border with Saudi Arabia will be resolved by the end of 2019.

Production at two large oil fields in the Neutral Zone was halted more than three years ago, cutting output by some 500,000 barrels per day.

"Oil prices remained soft after Friday's drop that stemmed from the Saudi Arabia and Kuwait deal to resume production along their border ... The short-squeeze on oil may be running out of steam but if WTI and Brent prices can hold $60 and $65 respectively, we could see prices remain supported going into the first few weeks of January," said Edward Moya, senior market analyst at OANDA in New York.

Oil prices have risen since the United States and China agreed on a so-called Phase 1 trade deal earlier this month following months of tit-for-tat negotiations that unsettled markets. President Donald Trump said on Saturday the United States and China would "very shortly" sign the pact.

Under the pact, the United States is expected to agree to reduce some tariffs in return for a big increase in purchases of U.S. agricultural products by Chinese importers.

Data showing that U.S. energy companies added the most oil rigs last week since February 2018, primarily in the Permian shale basin, also put pressure on prices.