Oil prices rise on expectations of more OPEC output cuts

Pump jacks operate at sunset in an oil field in Midland, Texas. (REUTERS/Nick Oxford/File Photo)
Updated 09 August 2019

Oil prices rise on expectations of more OPEC output cuts

  • Saudi Arabia has said it planned to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories

SEOUL: Oil prices rose on Friday, supported by expectations of more production cuts by OPEC amid fears the US-China trade row could lead to a global slowdown, curbing demand for crude.
International benchmark Brent crude futures, were at $57.61 a barrel by 0009 GMT, up 23 cents, or 0.4%, from their previous settlement.
US West Texas Intermediate (WTI) futures were at $52.79 per barrel, up 25 cents, or 0.5%, from their last close.
Both contracts jumped more than 2% on Thursday to recover from January lows, buoyed by reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the recent slide in crude prices.
Oil prices have still lost more than 20% from their peaks reached in April, putting them in bear territory.
Global financial markets were rocked over the past week after US President Donald Trump said he would impose 10% tariffs on Chinese goods starting September and a fall in the Chinese yuan sparked fears of a currency war.
China’s yuan strengthened against the dollar on Thursday, on the back of strong export growth in July.
Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries (OPEC), planned to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories, a Saudi oil official said on Wednesday.
“Saudi’s production in September will also be lower than it is currently. This helped crude oil rebound from its lowest level since January,” ANZ bank said in a note.
The United Arab Emirates also will continue to support actions to balance the oil market, the country’s energy minister Suhail Al-Mazrouei said in a tweet on Thursday.
The minister said the OPEC and non-OPEC ministerial monitoring committee would meet in Abu Dhabi on Sept. 12 to review the oil market.
OPEC and its allies including Russia agreed in July to extend their supply cuts until March 2020 to boost oil prices.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.