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Oil rose for a second day as Saudi Arabia was said to plan
Futures in New York rose as much as 0.6 percent after climbing 1.3 percent on Monday. A Saudi official said the world’s top crude exporter plans to pump well below 10 million barrels a day in April, stretching deeper-than-agreed cuts into a second month. Meanwhile, fellow OPEC member Venezuela’s output has slumped as electrical problems were making it difficult to operate wells, according to a senior official at the country’s oil ministry.
Crude has stayed above $55 a barrel since mid-February as the Organization of Petroleum Exporting Countries and its allies cap output to ease a glut. Still, there are worries over booming shale supply. The International Energy Agency estimates U.S. will account for 70 percent of the growth in global oil supply capacity through 2024. Meanwhile, risk assets across financial markets were buoyed after the U.K. struck a new deal for its exit from the European Union.
“Crude oil sailed higher as Saudi Arabia reiterated it would continue its above-quota cuts past the April OPEC+ meeting and continue to curb exports, which should further squeeze U.S. refiners and offset increased shale production somewhat,” said Jeffrey Halley, a senior market strategist at Oanda Corp. in Singapore. “Some initial profit-taking could be seen in early Asia trading, but the positive risk environment may see buyers on any dips.”
West Texas Intermediate for April delivery traded at $57.06 a barrel on the New York Mercantile Exchange, up 27 cents, at 7:46 a.m. in London. The contract rose 72 cents to $56.79 on Monday, the highest close since Feb. 28.
Brent for May settlement added 24 cents to $66.82 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 84 cents to $66.58 on Monday. The global benchmark crude traded at a $9.42 premium to WTI for the same month.
Saudi Arabia’s production cut means the country will ship less than 7 million barrels a day in April, significantly less than what its customers had requested for, the Saudi official said. With Venezuelan output squeezed by sanctions and power blackouts, refiners had asked for more than 7.6 million barrels a day, according to the official.
The IEA released its U.S. output forecast in a report before officials from OPEC and North American shale companies sat down for a dinner on the sidelines of CERAWeek by IHS Markit, the annual gathering in Houston of some of the energy industry’s biggest names. Earlier at the event, secretary general of the cartel Mohammad Barkindo said bringing supply and demand back into equilibrium remains a “work in progress.”
In the U.K., Theresa May made a last-minute decision to fly to Strasbourg, France, for late talks with European Commission President Jean-Claude Juncker. While the two leaders announced changes they both hope will put an end to the tortuous negotiations that have defined Britain’s exit from the 28-country bloc, it remains to be seen if the new wording will convince her country’s lawmakers to sign off on the plan in a crunch vote Tuesday night.
source: Bloomberg; With assistance from James Thornhill.To contact the reporter on this story: Heesu Lee in Seoul at email@example.com To contact the editors responsible for this story: Pratish Narayanan at firstname.lastname@example.org Ovais Subhani