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New York - Oil rose, posting the biggest intraday gain in more than a week, as Saudi Arabia pledged deep crude export cuts next month and supplies in the US are seen declining.
Futures advanced as much as 2.3% in New York. Saudi Arabia will cap shipments at 6.6 million barrels a day in August, 1 million lower than a year earlier, said Energy and Industry Minister Khalid Al-Falih.
In the US, crude, gasoline and distillate supplies are seen dropping in the next Energy Information Administration report due on Wednesday. The dollar weakened as the market awaits the start of the Federal Open Market Committee meeting later on Tuesday and further meetings on Capitol Hill.
Oil has remained below $50 a barrel amid worries that rising global output will offset curbs by members of the Organisation of Petroleum Exporting Countries and its allies.
While the Saudi comments at talks with oil producers in St. Petersburg, Russia, on Monday helped lift prices, ministers at the same meeting agreed to let Nigeria and Libya continue boosting production, slowing the market rebalancing.
“Yesterday’s Saudi decision to cut exports still lingers in the market,” said Bjarne Schieldrop, chief analyst for commodities at SEB Markets. The headlines that the US shale oil boom is easing are also driving futures higher, he said.
West Texas Intermediate for September delivery climbed $1.02 to $47.36 a barrel at 9:26 (15:26) on the New York Mercantile Exchange. Total volume traded was about 3% above the 100-day average. Prices rose 57 cents to $46.34 on Monday.
Brent for September settlement added 95c to $49.55 a barrel on the London-based ICE Futures Europe exchange. Prices rose 54c to $48.60 on Monday. The global benchmark crude traded at a premium of $2.26 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 on Monday. When OPEC holds its next full ministerial meeting in November, it may need to discuss extending the supply cuts for longer, United Arab Emirates Minister of Energy Suhail Al Mazrouei said in a Bloomberg television interview.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell as much as 0.2%. A weaker greenback boosts the appeal of dollar-denominated commodities as an investment.
Sliding supplies
US crude stockpiles probably dropped by 3.1 million barrels and gasoline supplies will likely slip by 1.85 million barrels last week, according to the median estimate in a Bloomberg survey before an EIA report.
Distillate stockpiles are seen falling by 750 000 barrels. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, probably dropped by 1 million barrels last week, according to a forecast compiled by Bloomberg.
“Fundamentals are tightening. Things are looking a little bit better,” Michael Loewen, a strategist at Scotiabank in Toronto, said by phone. “If we continue to see demand do well and some refined products draws in gasoline and distillates, the market should perform pretty well.”
The industry-funded American Petroleum Institute will release its inventory data later on Tuesday.
Oil-market news:
Hedge funds are still holding large bearish bets against oil and OPEC, yet out in the real world traders and refiners buying and selling actual barrels say it’s starting to look somewhat more bullish.
OPEC member Kuwait plans to start trading energy and not just producing it, joining other Middle Eastern producers eager to claw back some of the profit traders like Vitol Group and Glencore earn by buying and selling the region’s oil.
Oil may rise $5 to $7 a barrel on Venezuela supply disruption, Barclays warns.
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