Oil held gains near $70 a barrel after Saudi Arabia signaled it won’t export oil beyond its customers’ needs, dispelling fears that it may flood the market.
Futures in New York were little changed after gaining 2.1% in the previous three sessions. OPEC’s de facto leader Saudi Arabia, which has been under pressure from U.S. President Donald Trump to pump more and ease prices, said exports this month will be “roughly equal” to June, and they will drop by 100,000 barrels a day in August.
Crude has retreated by about 6% this month as the prospect of a tit-for-tat trade war between the U.S. and China rattled global financial markets. The U.S. oil benchmark closed above its 50-day moving average on Thursday after slipping below that level earlier this week, while worries over potential supply losses in Venezuela and Iran as well as sporadic disruptions in Libya linger.
“While Saudi Arabia is under pressure from Trump to keep oil prices low, it probably won’t like them to be too low at the same time,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “If it replaces the lost volumes from Iran and Venezuela, overall supplies will eventually be balanced.”
West Texas Intermediate crude for August delivery, which expires Friday, traded at $69.75 a barrel on the New York Mercantile Exchange, up 29 cents, at 1:21 p.m. in Seoul. Prices are down 1.8% this week, heading for a third weekly decline. Total volume traded was about 32% below the 100-day average. The more-active September contract was little changed at $68.24.
Brent for September settlement added 18 cents to $72.76 on the London-based ICE Futures Europe exchange. Prices on Thursday dropped 32 cents to $72.58. The contract is down 3.6% this week. The global benchmark traded at a $4.53 premium to WTI for the same month.
Futures for September delivery gained 1.2% to 491.7 yuan a barrel on the Shanghai International Energy Exchange, after rising 1.4% in the past two sessions.
“WTI will likely be buoyed above $65 and Brent above $70 for a while, but as uncertainties remain over the trade dispute between the U.S. and China, we’ll continue to have some downward pressure,” NH Investment & Securities’ Hong said.
Saudi Arabia’s pledge to keep its crude production steady from June to July follows an agreement last month between OPEC and its partners including Russia to boost production by 1 million barrels a day. Holding production steady would mean shipping less crude than Saudi Arabia indicated after the OPEC deal. The kingdom initially planned record output of 10.8 million barrels a day, people briefed on output policy said in June.
Prices had gained earlier after the Energy Information Administration reported gasoline held in U.S. storage tanks dropped last week by the most since May on the back of strong fuel demand, countering a surprise gain in nationwide crude inventories. Decline in refinery utilization rates, as well as oil exports that had dropped last week to the lowest level since April, contributed to the inventory build. — Bloomberg