Oil rises as Saudis to work with producers to stabilize market
NEW YORK (Bloomberg) -- Crude advanced as Saudi Arabia said it would work with other producers to curb market fluctuations and as China’s central bank stepped up efforts to support the economy.
WTI futures rose as much as 2.3%, trimming a fourth monthly decline. Saudi Arabia wants a stable oil market, according to state-run Saudi Press Agency. China reduced the amount of cash the nation’s lenders must lock away. Prices slipped in February as U.S. crude stockpiles climbed to the highest in more than eight decades.
"It’s the Saudis turn to talk up the market today," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The market is giving the oil producers the benefit of the doubt now. The move by the Chinese to cut the required reserve ration is also giving the market support."
Crude is down about 10% this year in New York on speculation a worldwide surplus will be prolonged amid increased exports from Iran. A proposal to freeze output by Saudi Arabia and Russia is achievable and prices may rise to as high as $50/bbl by the end of the year, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told CNBC. Yet there’s no sign of a recovery in the short term, according to Barclays Plc.
WTI for April delivery rose 39 cents, or 1.2%, to $33.17/bbl at 9:44 a.m. on the New York Mercantile Exchange. Prices rose 11% last week, the most since August. Total volume traded was 10% lower than the 100-day average.
Brent for April settlement increased 62 cents, or 1.8%, to $35.72/bbl on the London-based ICE Futures Europe exchange. Brent’s premium to WTI was $2.55, after reaching an 11-week high of $2.86 on Feb. 26. The more-active May contract climbed 60 cents to $36.04.
Hedge funds and other speculators have increased net-long positions in WTI futures and options to the highest level since November, U.S. Commodity Futures Trading Commission data show. Speculators’ net-long position in WTI rose by 13,385 contracts to 110,554 in the week ended Feb. 23. Shorts, or bets that prices will decline, slipped 6.7% while longs climbed 0.2%.
Money managers increased their bullish stance on Brent crude to the highest in at least five years. Funds boosted net-longs in Brent by 35,416 contracts to 320,289 in the week to Feb. 23, according to data published Monday by ICE Futures Europe. That’s the highest since at least early 2011.
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