Oil rises as market seen in balance, but slow demand in Asia hurts

TOKYO/SINGAPORE — Oil prices rose on Monday following comments from the Saudi energy minister that the market was heading towards balance, although signs of slowing demand in Asia weighed.

Brent crude futures were trading at $50.60 per barrel at 0643 GMT, up 25 cents from their last settlement. US crude was up 22 cents at $49.21.

US markets are closed on Monday for the US Independence Day holiday.

“The bulls are seemingly once again on their relentless march to keep this market above $ 50,” said Matt Stanley of oil brokerage Freight Investor Services in Dubai.

The energy minister of Saudi Arabia, the world’s top crude exporter, and the secretary general of the Organization of the Petroleum Exporting Countries agreed that global oil markets were heading towards balance, and that prices reflect this.

But Mr. Stanley said there were also signs that prices could fall again soon, pointing at stalling gasoline demand and improving output in Canada and Nigeria. Attacks in the Niger Delta have pushed Nigerian crude production to 30-year lows, although the Nigerian National Petroleum Corp. said last week that output was rising following repairs. Oil demand and as a result prices could come under pressure as weak margins prompt run cuts at a time when refineries in Asia are already gearing up to enter their maintenance season.

“After another counter- seasonal summer build, gasoline cracks now trade below diesel, which should force refiners to act… The end result is likely to be run cuts, with some signs already emerging for 3Q,” Morgan Stanley said on Monday.

“Asia refiners have already started to pull back... and there are reports of cargoes struggling to sell,” it added.

Higher oil output is another factor that could cap prices.

In the United States, drillers last week added oil rigs for a fourth week in five, in the best month of producers returning to the well pad since August 2016.

Also, Russian oil output stood at 10.84 million barrels per day ( bpd) in June, up from 10.83 bpd in May.

In Norway, oil workers signed a deal on Saturday, avoiding a strike that would have cut output from western Europe’s top oil producer by about 6%.

Money managers cut their net long US crude futures and options positions in the week to June 28, the US Commodity Futures Trading Commission said on Friday.