Crude leaps after Saudi pledge

Energy minister says lower cap on exports will be put in place

Oil surged Tuesday the most since November as the market appears to be tightening, with Saudi Arabia pledging deeper cuts to crude exports and supplies in the U.S. shrinking.

Crude inventories declined by 10.2 million barrels last week in an American Petroleum Institute report released Tuesday, people familiar with the data said. That would be the largest draw since September if Energy Information Administration data confirms the drop on Wednesday.

Futures have advanced in the past two sessions as the market appears to be tightening. Saudi Arabia will cap shipments at 6.6 million barrels a day in August, 1 million lower than a year earlier, Energy Minister Khalid Al-Falih said.

Futures on Tuesday rose 3.3 percent in New York, and the global Brent benchmark closed above $50 a barrel for the first time since June.

“They have chased the bears back into the woods. Sentiment in the market is mildly bullish,” said James Williams, an economist at energy-research firm WTRG Economics.

Even as oil surges, there are some lingering doubts on the pace of the oil market rebalancing, with rising supplies from the U.S., Libya and Nigeria threatening to hinder curbs by members of the Organization of the Petroleum Exporting Countries and its allies. Saudi Arabia won’t act alone to balance the market and other nations should improve their implementation of supply cuts, Al-Falih said.

West Texas Intermediate for September delivery climbed $1.55 to settle at $47.89 a barrel on the New York Mercantile Exchange, the highest close since June 6.

Brent for September settlement added $1.60 to end the session at $50.20 a barrel on the London-based ICE Futures Europe.