Brent oil clocks fresh one-month high in Asia

Brent oil clocked a fresh one-month high of $54.04 in Asia as traders priced-in a possibility of a bigger and much deeper extension of the output cut deal.

OPEC likely to extend supply cuts this Thursday

OPEC and other major oil producers are on track to extend the supply cuts at a meeting on Thursday. Most producers have backed Russia and Saudi Arabia’s proposal of extending the output cut deal until next March.

Saudi talks about deeper cuts

“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers, if they wish to join, will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018”, said Saudi’s Energy Minister Khalid al-Falih on Sunday.

Oil is well bid in Asia on the back of a bullish sound bite from the Saudi’s Minister, although the gains are still being capped by the prospects of higher Shale output. The Baker Hughes data released on Friday showed the US energy companies added oil rigs for an 18th week in a row. The total rig count stands at 720; the most since April 2015.

Brent Technical Levels

A break above $54.49 (78.6% Fib R of Apr high – May low) would expose hurdle at $55.00 (zero levels). On the lower side, breach of support at $53.79 (session low) could yield a pullback to $52.81 (61.8% Fib R of Apr high – May low).