Sun, Jun 09, 2019 - Page 14 News List

Oil rebounds on Saudi, Russian vow to curb glut

RISING UNCERTAINTIES:One expert said that the market could quickly swing from surplus to deficit, as West Texas Intermediate’s volatility has risen to a high


Oil on Friday ended a tumultuous week on the upswing after Saudi Arabia and Russia reiterated their commitment to averting a global supply glut and US President Donald Trump declared progress in his standoff with Mexico.

Futures in New York gained 2.7 percent, just two days after crashing into bear market territory.

At a conference in Saint Petersburg, Russia, Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih said that he was sure OPEC and its partners would prolong output restraints into the second half of this year.

Russian Minister of Energy Alexander Novak said that the two countries have agreed to take coordinated action.

“The message is clear: Price-supportive OPEC/non-OPEC supply curbs will stay in place for the foreseeable future,” analysts at London-based PVM Oil Associates Ltd wrote in a note to clients.

US oil futures on Wednesday fell to less than US$51 per barrel, completing a swoon of more than 20 percent since late April as the Trump administration’s multiple trade disputes escalated.

Yet, prices rallied in the final two days of trading this week as US officials negotiated with Mexico, helping West Texas Intermediate crude avoid a third straight weekly decline.

Trump on Friday said on Twitter that there was a “good chance” the US would reach an agreement averting new tariffs on Mexico before a tomorrow deadline.

Data from oilfield services provider Baker Hughes also showed US explorers cut drilling-rig activity to a 15-month low this week.

West Texas Intermediate for settlement next month closed US$1.40 higher at US$53.99 per barrel on the New York Mercantile Exchange and was up 1 percent for the week.

Brent for August settlement gained US$1.62 to US$63.29 per barrel on London’s ICE Futures Europe exchange, but was still down 1.9 percent this week.

The global benchmark was trading at a US$9.13 premium to West Texas Intermediate for the same month.

With geopolitical crises abounding, West Texas Intermediate’s 30-day volatility has risen to its highest in four months.

“There’s so many uncertainties, it’s hard to make a call on the sustainability of any move,” NASDAQ director of energy and utilities Tamar Essner said. “We could easily swing from a state of surplus to deficit in a not-very-long period of time.”

In other energy trading, wholesale gasoline rose 1.8 percent to US$1.74 per gallon and heating oil climbed 2 percent to US$1.82 per gallon, while natural gas added 0.6 percent to US$2.34 per 1,000 cubic feet.

Gold futures posted their best week since March last year as weaker-than-expected US jobs data underscored mounting economic concerns that have revived demand for the metal as a haven.

US employers last month added the fewest workers in three months as wage gains cooled, a government report on Friday showed. Treasury yields and the dollar fell.

The figures add to evidence of widening economic fallout from a US-China trade war, which helped propel gold to a 2.7 percent gain this week.

Even before Friday’s report, expectations have been rising that the US Federal Reserve will ease monetary policy this year. Lower rates help make gold more competitive against assets that offer interest.

“Usually the reaction would not be this rough, but investors are dropping the dollar index like a stone because of the concerns around the trade war,” ThinkMarkets chief market analyst Naeem Aslam said in an e-mailed report.

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