Oil buoyed by Saudi talk on output cuts

Brent futures rise on comment by kingdom’s energy minister of need to extend production cuts into 2019

Oil prices rose yesterday after the Saudi energy minister said Opec would need to keep coordinating supply cuts with nonmember countries including Russia into 2019.

Oil’s rise defied a slump in global stock markets, which fell in response to worries about a trade stand-off between the United States and China. Gold, seen as a safe haven, hit a two-week high.

Brent crude futures were at $69.10 (Dh253.80) per barrel at 1136 GMT, up 19 cents but off a session high of $70. For the week, Brent was up about 4.4 per cent, its strongest showing since October.

US West Texas Intermediate (WTI) crude futures were at $64.57 a barrel, up 27 cents, but below a session high of $65.42. On the week, WTI was up about 3.6 per cent.

Since January 2017, the Organisation of Petroleum Exporting Countries as well as a group of non-Opec countries led by Russia, have curbed output by 1.8 million barrels per day to counteract surging US output.

Saudi Energy Minister Khalid Al Falih said Opec members would need to continue coordinating with Russia and other non-Opec oil-producing countries on supply curbs in 2019 to reduce global oil inventories. Opec officials have also said producers could look at a longer period than five years for developedcountry oil stocks averages as a reference point.

“As the Saudi guessing game for the new rebalancing target begins, Brent seems well positioned to have another crack at the $70 [a barrel] level,” PVM said in a note.

Morgan Stanley also cited an expected pickup in seasonal demand in the coming months.

“We are only three-four weeks away from peak refinery maintenance, after which crude and product demand should accelerate ... Global inventories are already at the bottom end of the five-year range,” the US bank said.

“There are sufficient reasons to expect oil prices to strengthen further from here, and we stick with our [Brent] $75 per barrel call for the third quarter,” Morgan Stanley said. Sensex (IN)