Oil extended gains toward $47 a barrel as Saudi Arabia promised deep cuts to crude exports next month to help ease a global glut.
Futures in New York added as much as 0.8 percent after rising 1.3 percent Monday. Saudi Arabia will cap shipments at 6.6 million barrels a day in August, 1 million lower than a year earlier, Energy and Industry Minister Khalid Al-Falih said in St. Petersburg, Russia. U.S. crude stockpiles probably fell for a fourth week through July 21, according to a Bloomberg survey before government data Wednesday.
Oil remains in a bear market amid concern rising global output will offset curbs by members of the Organization of Petroleum Exporting Countries and its allies. Nigeria and Libya, exempt from the deal to reduce supply, will be allowed to continue boosting production to their desired levels, Al-Falih said after a technical committee meeting tasked with monitoring compliance to cuts.
“The market is going to focus squarely on two things — whether OPEC will back up its rhetoric, and what’s going to happen with U.S. production,” said David Lennox, a Sydney-based resource analyst at Fat Prophets. “Prices are probably going to sit in this $45 to $50 a barrel region and consolidate.”
West Texas Intermediate for September delivery gained as much as 36 cents to $46.70 a barrel on the New York Mercantile Exchange, and was at $46.62 at 1:18 p.m. in Hong Kong. Total volume traded was about 29 percent below the 100-day average. Prices rose 57 cents to $46.34 on Monday.
Brent for September settlement climbed as much as 36 cents, or 0.7 percent, to $48.96 a barrel on the London-based ICE Futures Europe exchange. Prices rose 54 cents, or 1.1 percent, to $48.60 on Monday. The global benchmark crude traded at a premium of $2.25 to WTI.
Saudi Arabia won’t act alone to balance the market and other nations should improve their implementation of supply cuts, Al-Falih said Monday. When OPEC holds its next full ministerial meeting in November, it may need to discuss extending the supply cuts further, United Arab Emirates Minister of Energy Suhail Al Mazrouei said in a Bloomberg television interview.
Oil-market news:
U.S. crude stockpiles probably dropped by 3.1 million barrels last week, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday. Halliburton Co., promising to be disciplined in adding more fracking gear to the oilfields, says U.S. explorers are “tapping the brakes” on drilling as the price of oil struggles to breach $50 a barrel.