OIL PRICES MAXIMUM
PLATTS - ICE Brent crude futures remained at 27-month highs in mid-morning trade in Asia Monday, following the gains last week on the expectation that planned supply cuts will be extended to the end of 2018.
At 11:21 am Singapore time (0321 GMT), the ICE December Brent crude futures were down 6 cents/b (0.1%) from Friday's settle at $60.38/b, while the NYMEX December light sweet crude contract was up 4 cents/b (0.07%) at $53.94/b.
The expectation that output cuts by OPEC and non-OPEC producers will be extended have firmed up in recent days, amid comments by key officials that the group was inching closer to a consensus.
Over the weekend, Saudi Arabia's crown prince Muhammad bin Salman reaffirmed his backing for an extension beyond the current March 2018 deadline.
"The kingdom affirms its readiness to extend the production cut agreement, which proved its feasibility by rebalancing supply and demand," the crown prince said in a statement.
Similar remarks by him late last week sent crude prices soaring by more than 3% over October 26-27, with ICE Brent now at highs not seen since July 2015.
Nonetheless, an agreement is far from certain. Russian energy minister Alexander Novak, who is due to meet Saudi oil minister Khalid al-Falih in Riyadh this week, has said he does not see a need to announce any extension at the November 30 meeting.
With last week's gains, crude prices are now at risk of a short-term correction.
The Relative Strength Index on the four-hourly candlestick chart for front-month ICE Brent and NYMEX light sweet showed both contracts in overbought territory, a condition that has usually triggered a round of profit-taking in the past.
"We note that the RSI moving into extremely overbought territories has been an excellent advance indicator of crude oil downward corrections this year," said OANDA senior market analyst Jeffrey Halley.
The upswing in oil prices will also likely trigger greater hedging from producers, keeping future output elevated despite OPEC's efforts to curb global oversupply.
Analysts have identified the $51-$52/b region for NYMEX light sweet as a key area for hedging by US drillers.
Separately, Baker Hughes data last Friday showed the number of active US oil rigs rising by 1 in the week ended October 27 to 737.
As of 0321 GMT Monday, the US dollar index was down 0.06% at 94.67.