Oil prices jump as Saudi Ara­bia prom­ises to trim ex­ports; US sup­plies also seen fall­ing

Muscat Daily - - BUSINESS -

Lon­don, UK - Oil prices jumped on Tues­day as Saudi Ara­bia promised deep cuts to crude ex­ports next month while the US shale boom showed signs of slow­ing.

Fu­tures in New York rose 2.3 per cent, the big­gest gain in more than a week. Saudi Ara­bia will cap ship­ments at 6.6mn bar­rels a day in Au­gust, 1mn lower than a year ear­lier, said Saudi Ara­bia’s En­ergy and In­dus­try Min­is­ter Khalid al Falih. In the US, Hal­libur­ton Co and Anadarko Petroleum Corp sig­naled that the in­vest­ment in shale fields may fi­nally be suc­cumb­ing to the oil price slump.

Oil re­mains in a bear mar­ket amid con­cern ris­ing global out­put will off­set curbs by mem­bers of the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries and its al­lies. While the Saudi com­ments at talks with oil pro­duc­ers in St Peters­burg, Rus­sia on Mon­day helped lift prices, the same meet­ing agreed to let Nige­ria and Libya con­tinue boost­ing pro­duc­tion, slow­ing the mar­ket re­bal­anc­ing.

“Yes­ter­day’s (Mon­day) Saudi de­ci­sion to cut ex­ports still lingers in the mar­ket,” said Bjarne Schiel­d­rop, chief an­a­lyst for com­modi­ties at SEB Mar­kets. The head­lines that the US shale oil boom is eas­ing are also driv­ing fu­tures higher, he said.

West Texas In­ter­me­di­ate (WTI) for Septem­ber de­liv­ery climbed by US$1.02 to US$47.36 a bar­rel at 9.26am on the New York Mer­can­tile Ex­change. To­tal vol­ume traded was about three per cent above the 100 day av­er­age. Prices rose 57 cents to US$46.34 on Mon­day.

Brent for Septem­ber set­tle­ment climbed as much as 95 cents, or two per cent, to US$49.55 a bar­rel on the Lon­don-based ICE Fu­tures Europe ex­change. Prices rose 54 cents to US$48.6 on Mon­day. The global bench­mark crude traded at a pre­mium of US$2.26 to WTI.

Saudi Ara­bia won’t act alone to bal­ance the mar­ket and other na­tions should im­prove their im­ple­men­ta­tion of sup­ply cuts, Falih said on Mon­day. When OPEC holds its next full min­is­te­rial meet­ing in Novem­ber, it may need to dis­cuss ex­tend­ing the sup­ply cuts for longer, United Arab Emi­rates Min­is­ter of En­ergy Suhail Al Mazrouei said in a Bloomberg tele­vi­sion in­ter­view.

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