Oil set for best weekly run since October 2016

HONG KONG: Oil is heading for a fifth weekly advance as political upheaval in the world’s biggest crude exporter countered an expansion of US output to the highest level in more than three decades.

Futures were little changed in New York, up 2.5% for the week. Arrests on the weekend of senior Saudi Arabian officials in an anti-corruption probe is seen as consolidating power for Crown Prince Mohammed Salman, who supports extending Organisation of Petroleum Exporting Countries (Opec)-led output cuts.

While prices eased during the week, record weekly US oil production and a surprise increase in crude stockpiles weren’t enough to peg back Monday’s 3.1% surge.

Oil is heading for the longest run of weekly gains since October 2016 as global supplies tighten and on signs the will extend output curbs past the end of March.

Opec this week said US shale production will grow considerably faster than expected over the next four years after cuts triggered a price recovery.

“Political stability was jolted awake this week after Saudi Arabia launched an anti-corruption probe,” Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking Group Ltd, said in a note.

“While the likelihood of a disruption to supply remains low, we believe the events raise the probability of Saudi Arabia taking a more aggressive stance on production curbs. The risks now lie towards curbs remaining in place longer than expected.”

West Texas Intermediate for December delivery was at US$57.01 a barrel on the New York Mercantile Exchange, down 16 US cents, at 7.40am in London yesterday. Total volume traded was about 48% below the 100-day average. Prices added 36 US cents to US$57.17 on Thursday.

Brent for January settlement lost 20 US cents to US$63.73 a barrel on the Londonbased ICE Futures Europe exchange. Prices are up 2.7% this week, set for a fifth weekly gain.

The global benchmark crude was at a premium of US$6.49 to January WTI.

Saudi Arabia said it plans to cut crude exports to all the regions it ships to next month.

Shipments will fall by 120,000 barrels a day in December from November, a spokesman for the Energy Ministry said, without specifying what those levels would be.

Bloomberg calculations from vessel-tracking data estimated flows in October at 6.989 million a day.