Mubasher: Oil prices rose on Tuesday, as top producer Saudi Arabia seemed to deepen the supply curbs announced by the Organization of Petroleum Exporting Countries (OPEC).
However, the on-going surge in US supply and concerns over the global economy kept a lid on price gains.
By 9:43 am GMT, US Nymex crude futures climbed 0.51% to $57.08 per barrel (pb), while global benchmark Brent futures rose 0.48% to $66.90 pb.
Oil prices have been getting broad support this year from the output cuts led by an OPEC-led group, including Russia, aimed at tightening markets.
Saudi Arabia, OPEC’s de-facto leader, prepares to slash its oil exports less than 7 million barrels per day (bpd) next April, while maintaining output “well below” 10 million bpd, compared with nearly 10.14 million bpd last February, Thomson Reuters reported on Monday, citing a Saudi official.
“Owing to the [...] headline yesterday that Saudis have pledged deeper-than-agreed production cuts for April [...] is the reason we saw a rally,” Dubai-based Starfuels broker Matt Stanley told Thomson Reuters.
In the same vein, crude price rally was fuelled by the political and economic crisis in oil-rich Venezuela, another OPEC member, traders told the news agency.
Venezuela’s congress on Monday declared a “state of alarm” following a five-day power blackout that threw a wrench into the Latin American nation’s oil shipments, leaving millions of citizens with a shortage of food and water.
On the other hand, climbing US oil production wiped out the impact of OPEC efforts to shore up prices and disrupted Venezuelan supply.
US output would rise by around 2.8 million bpd, growing to 13.7 million bpd in 2024 from an average of just below 11 million bpd last year, the International Energy Agency (IEA) said, making the country until now the world’s biggest oil producer.
With such output boom, the US needs to import less, and gradually turn to sell surplus oil.
The decline in net crude imports last December was mainly ascribed to lower shipments from Saudi Arabia, and higher exports to nations like South Korea, China and India, Barclays told Reuters.
