Oil rally resumes as OPEC+ seen keeping supply tight

LONDON, Oct 29 (Reuters) – Oil rose further above $84 a barrel on Friday, within sight of a multi-year high hit this week, as expectations OPEC and its allies will keep supply tight countered rising U.S. inventories and the prospect of more Iranian exports.

Algeria said on Thursday a crude output increase by OPEC and its allies in December should not exceed 400,000 barrels per day because of risks. The alliance, which is gradually unwinding last year’s record output cuts, meets on Nov. 4.

“Supply will therefore continue to play catch-up with demand in the immediate term,” said Stephen Brennock of oil broker PVM. “In short, OPEC+ is intent on continuing to act as a key pillar of price support.”

Brent crude rose 25 cents, or 0.3%, to $84.57 a barrel by 1104 GMT, while U.S. West Texas Intermediate crude added 27 cents, or 0.3%, to $83.08. Both benchmarks touched multi-year highs on Monday.

Crude has surged in 2021 as economies recover from the pandemic. Still, prices are on track to fall this week – the first weekly drop in about two months for Brent.

This week’s U.S. inventory figures showed crude stocks rose by a more-than-expected 4.3 million barrels.

Iran said talks on reviving its nuclear deal will resume by the end of November, bringing it a step closer to boosting oil exports.

“The sharp rise in U.S. crude oil stocks and the expectation of nuclear talks being resumed with Iran have temporarily eased concerns about supply to some extent,” said Carsten Fritsch of Commerzbank.

The heat also came out of the rally due to easing concern about surging natural gas and coal prices that have spurred fuel-switching in power generation.

British and European gas prices continued to fall on Friday after Russian President Vladimir Putin said Russia could start pumping gas into European storage.

Additional reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; editing by Jason Neely

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