By Alison Sider and Christopher Alessi
Oil prices pressed higher Friday morning, with Brent crude topping the elusive $60-a-barrel mark for the first time in more than two years.
Brent, the global benchmark, recently traded up 71 cents, or 1.2%, at $60.01 a barrel on ICE Futures Europe. U.S. crude futures traded up 81 cents, or 1.54%, at $53.45 a barrel on the New York Mercantile Exchange.
"There's a lot of emotional momentum building," said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy-trading desk. The $60 price is "a big bull's-eye" that oil producers and bullish investors have been eyeing all year.
Brent hit a two-year high Thursday, settling at $59.30 a barrel, helped by declining inventories of fuel and optimism that the Organization of the Petroleum Exporting Countries will likely extend a deal to limit production and rein in global oversupply.
Analysts and market participants said Friday's move higher was fueled by technical factors, with more traders piling in as prices rose. But the fundamental outlook has also shifted, with stockpiles falling and questions about the growth rate of U.S. shale output also fueling gains.
"It's been a slow train coming," said Mark Benigno, co-director of energy trading at INTL FCStone, but investors have come around to the idea that OPEC's efforts are paying off. "It's happening the way they were hoping it would," Mr. Benigno said.
Some expect oil to encounter staunch resistance on its march higher. Producers are likely to take advantage of the rally to hedge, or lock in higher prices for output next year.
"It can't really go above $60" a barrel, Giovanni Staunovo, a commodity analyst at UBS Wealth Management, said of the price of Brent. "If it goes too high, it's an indication to U.S. shale producers to produce more oil," a development that could undermine the oil market rebalancing under way, he said.
Mr. Staunovo said UBS expects the price of Brent to stay in a range of $55 to $60 a barrel.
"There is certainly no general consensus on whether this psychological threshold [$60 a barrel], which was last seen in July 2015, will be overcome in the near-term," Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd., wrote in a note Friday.
Mr. Brennock said the "ingredients are there" for Brent to move higher but that "sustaining it will be a herculean challenge."
Prices have been supported this week by data showing declining commercial petroleum stocks in the U.S. and news that Saudi Arabia and Russia -- the world's two largest crude producers -- want to extend the agreement to curb output after the deal expires in March 2018, likely through the end of next year.
OPEC and some major producers outside the cartel, including Russia, first agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices.
OPEC and Russia are set to formally discuss an extension of the deal at the cartel's next official meeting in Vienna on Nov. 30.
Meanwhile, analysts and investors are looking ahead to monthly U.S. supply and demand data, out on Tuesday.
Gasoline futures rose 0.59 cent, or 0.34%, to $1.7565 a gallon. Diesel futures rose 2.11 cents, or 1.15%, to $1.8630 a gallon.
Write to Alison Sider at [email protected] and Christopher Alessi at [email protected]