Oil rose as Saudi Arabia said it would make deep cuts to its crude exports in August and encourage better compliance with supply reductions from other producers.
Futures rose as much as 1 percent in New York. Saudi Arabia, OPEC’s largest producer, will limit exports to 6.6 million barrels a day in August, 1 million lower than year earlier, Minister of Energy and Industry Khalid Al-Falih said after a meeting with fellow producers. The nations gathering in St. Petersburg, Russia, made no major changes to their wider supply agreement, stopping short of capping output of Libya and Nigeria.
Oil remains in a bear market amid concern that rising global output will offset curbs by members of the Organization of Petroleum Exporting Countries and its allies, including Russia. The group is likely to become less compliant with its cuts toward the end of this year, with the risk of a domino effect after some members suggested they won’t adhere to their targets, according to JPMorgan Chase & Co.
“Some countries continue to lag” in their compliance “which is a concern we must address head on,” Al-Falih told reporters before the meeting ended. While other producers support the recovery in output from Libya and Nigeria “the committee, however, should monitor the impact of such growth in supply on global supply-demand balances.”
West Texas Intermediate for September delivery was at $46.14 a barrel on the New York Mercantile Exchange, up 0.8 percent, at 11:25 a.m. in London. Total volume traded was about 55 percent above the 100-day average.
Brent for September settlement was 46 cents higher at $48.52 a barrel on the London-based ICE Futures Europe exchange. Prices lost 1.7 percent last week. The global benchmark crude traded at a premium of $2.38 to WTI.
Libya, which has increased output above 1 million barrels a day, isn’t planning to limit production until reaching its target of pumping 1.25 million a day by December, according to people familiar with the matter. Nigeria is ready to cap or even reduce its supply if it can maintain output of 1.8 million barrels a day, according to the same people. Both countries are exempted from OPEC’s cuts agreement due to internal strife that hindered the recovery of their crude production.
Oil-market news:
Kuwait urges OPEC, non-OPEC to “redouble and focus” efforts. Market re-balancing is on track and is set to accelerate in the second half of the year, OPEC Secretary-General Mohammad Barkindo said. U.S. drillers trimmed the rig count last week by 1 to 764, the first drop in three weeks, according to Baker Hughes data Friday. Nigeria signaled earlier this month that it would cap production when it can maintain stable production of 1.8 million barrels a day.
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