Crude advances as Saudi Arabia dismisses oversupply speculation
NEW YORK (Bloomberg) -- Crude pushed higher after Saudi Arabia pledged not to flood world markets with oil.
Futures rose as much as 2.1% in New York on Thursday, reversing early-morning losses. Saudi Arabia dismissed assertions that it’ll oversupply demand as “without basis” and said it “does not try to push oil into the market beyond its customers’ needs.” As evidence, the Kingdom will reduce crude exports next month by roughly 100,000 bpd.
“The handful of comments from the Saudis” boosted prices, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “It’s a strong statement.”
Oil has fallen from recent highs as the U.S.-China trade war and the specter of mounting supplies from Saudi Arabia, the U.S. and Libya triggered concern about renewed oversupply. Conversely, Saudi Arabia’s Energy Ministry on Thursday predicted there will be substantial stockpile declines due to robust demand in the the second half of this year.
West Texas Intermediate crude for August delivery, which expires Friday, rose $1.34 to $70.10/bbl at 10:05 a.m. on the New York Mercantile Exchange. The more-active September contract advanced 88 cents to $68.63.
Brent for September settlement advanced 74 cents to $73.69 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $5.06 premium to WTI for the same month.
A key OPEC committee said Wednesday that compliance with pledged output cuts was 121% in June. Saudi Arabia, the group’s de facto leader and the biggest producer, said production this month will be slightly higher than in June, according to people familiar with the matter.
