Sun, Jul 22, 2018 - Page 14 News List

Oil rises as Saudi Arabia vows to maintain supply

Bloomberg and Reuters, HOUSTON, Texas

Oil extended gains to near US$70 per barrel after Saudi Arabia signaled it would not export oil beyond its customers’ needs, dispelling fears that it might flood the market.

Futures in New York rose 0.9 percent after gaining 2.1 percent in the prior three sessions.

OPEC’s de facto leader, Saudi Arabia, which has been under pressure from US President Donald Trump to pump more and ease prices, said that exports this month would be “roughly equal” to last month and that they would drop by 100,000 barrels per day next month.

Crude has retreated by almost 6 percent this month as the prospect of a tit-for-tat trade war between the US and China has rattled global financial markets.

The US oil benchmark on Thursday closed above its 50-day moving average after slipping below that level earlier this week, while worries over potential supply losses in Venezuela and Iran, as well as sporadic disruptions in Libya, linger.

“While Saudi Arabia is under pressure from Trump to keep oil prices low, it probably won’t like them to be too low at the same time,” NH Investment & Securities Co commodities trader Hong Sung-ki said in Seoul. “If it replaces the lost volumes from Iran and Venezuela, overall supplies will eventually be balanced.”

West Texas Intermediate (WTI) crude for delivery next month, which expired on Friday, climbed as much as 1 percent to US$70.12 per barrel on the New York Mercantile Exchange and traded at US$70.06 at 4:03pm on Friday in Seoul.

Total volume traded was about 32 percent less than the 100-day average. The more active September contract rose 0.4 percent to US$68.53.

Brent for September settlement added US$0.31 to US$72.89 on the London-based ICE Futures Europe exchange. Prices on Thursday dropped US$0.32 to US$72.58. The contract was down 3.2 percent this week.

Brent traded at a US$4.37 premium to WTI for the same month.

Futures for September delivery gained 1.5 percent to 493.4 yuan per barrel on the Shanghai International Energy Exchange, after rising 1.4 percent in the prior two sessions.

“WTI will likely be buoyed above US$65 and Brent above US$70 for a while, but as uncertainties remain over the trade dispute between the US and China, we’ll continue to have some downward pressure,” Hong said.

Saudi Arabia’s pledge to keep its crude production steady followed an agreement last month between OPEC and its partners, including Russia, to boost production by 1 million barrels per day.

Holding production steady would mean shipping less crude than Saudi Arabia indicated after the OPEC deal.

The kingdom initially planned record output of 10.8 million barrels per day, people briefed on output policy said last month.

Prices had gained earlier after the US Energy Information Administration reported that gasoline held in US storage tanks dropped last week by the most since May on the back of strong fuel demand, countering a surprise gain in nationwide crude inventories.

Decline in refinery utilization rates, as well as oil exports, which had dropped last week to the lowest level since April, contributed to the inventory build.

Italy’s imports of US crude oil last month vaulted to a new record after attacks by armed groups shuttered two major Libyan oil ports and cut off most deliveries from the OPEC country, a key supplier to Europe, according to Thomson Reuters trade flow data and shipping intelligence firm Kpler SAS.

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