Oil Surges 3% Amid Signs of Slowing Output in US and Saudi Vow
to Reduce Crude Exports
July 26, 2017
Oil rose 3.3 percent on Tuesday to the highest close in more than
a month, a day after U.S. oil producer Anadarko said it would
cut capital spending plans and Saudi Arabia vowed to reduce
crude exports to help curb global oversupply.
Brent crude futures rose $1.60 or 3.3 percent to settle at $50.20
a barrel, the first time the benchmark closed above $50 since
June 6. U.S. West Texas Intermediate futures rose $1.55 or 3.3
percent to settle at $47.89 a barrel, the highest close for that
benchmark since early June.
The lower oil prices in June and July may have been affecting
U.S. shale production, said Mark Watkins, regional investment
manager at U.S. Bank.
At a meeting of the Organization of the Petroleum Exporting
Countries (OPEC) and non-OPEC producers on Monday in St
Petersburg, Russia, Saudi Arabian Energy Minister Khalid
al-Falih said his country would limit crude exports to 6.6
million barrels per day (bpd) in August, down almost 1 million
bpd from a year earlier.
Nigeria agreed to join the deal by capping or cutting its output
from 1.8 million bpd once it stabilizes at that level.
OPEC said stocks held by industrial nations had fallen by 90
million barrels in the first six months of the year but were
still 250 million barrels above the five-year average, which is
the target level for OPEC and non-OPEC members.
U.S. crude stocks fell sharply last week as refineries boosted
output, while gasoline inventories increased and distillate
stocks decreased, data from industry group the American
Petroleum Institute showed on Tuesday.
Crude inventories fell by 10.2 million barrels in the week ending
July 21 to 487 million, compared with expectations for a
decrease of 2.6 million barrels. Both benchmarks rose more than
2 dollars after the data in post-settlement trading.
However, higher oil prices could be a "double edged sword"
Commerzbank wrote in a note on Tuesday.
Reuters
|