Oil extended gains as Saudi Arabia and Russia sought to reassure investors that coordinated production cuts by OPEC and its partners are draining a global glut.
Futures rose as much as 0.7 percent in New York after climbing 0.4 percent Friday. Inventories are declining and reductions will accelerate in the next three to four months, Saudi Arabia’s Energy Minister Khalid Al-Falih said at a briefing in Kazakhstan with his Russian counterpart, Alexander Novak. Russia is committed to doing everything it can to balance the market, Novak said.
Oil is trading below $50 a barrel amid speculation increased U.S. supplies will counter production curbs by the Organization of Petroleum Exporting Countries and its allies, including non-member Russia. American drillers targeting crude added rigs for the 21st straight week, the longest run of gains in three decades, according to data Friday from Baker Hughes Inc.
“Global stockpiles are coming down steadily, it’s just that it has started from a very high level,” said Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc. “OPEC doesn’t need to expand the size of production cuts because the last thing they want is a big, unsustainable gain in prices.”
West Texas Intermediate for July delivery rose as much as 32 cents to $46.15 a barrel on the New York Mercantile Exchange and traded at $46.08 at 1:19 p.m. in Hong Kong. Total volume traded was about 5 percent above the 100-day average. Prices increased 19 cents to close at $45.83 on Friday, trimming the weekly decline to 3.8 percent.
See also: America’s Stubborn Oil Supply Glut Catches Hedge Funds Off Guard
Brent for August settlement climbed as much as 36 cents, or 0.8 percent, to $48.51 a barrel on the London-based ICE Futures Europe exchange. Prices lost 3.6 percent last week. The global benchmark crude traded at a premium of $2.10 to August WTI.
Global crude inventories will settle at their five-year historical average — OPEC’s target — before the end of the year, Al-Falih said in Astana. Still Saudi Arabia, the group’s biggest producer, may modify its policy if output cuts don’t have the desired effect, he said.
Oil-market news:
U.S. drillers increased the rig count by eight to 741, the highest level since April 2015, according to Baker Hughes. Qatar, the focus of a diplomatic dispute with Saudi Arabia, is committed to production cuts under the OPEC-led agreement, according to Qatari Energy Minister Mohammed Al Sada.
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