Singapore: Oil climbed for a second day after Saudi Arabia pledged to deepen production cuts and US President Donald Trump said he might extend a deadline for additional tariffs on China.
Futures in New York added as much as 1.5 per cent after rising 1.3 per cent Tuesday. The world’s biggest crude exporter will continue to curb output more than required by a December deal among top producers, Energy Minister Khalid Al-Falih told the Financial Times Wednesday. Trump said he’s open to extending the March 1 deadline if the US and China are close to a trade agreement.
Brent for April settlement advanced 53 cents to $62.95 a barrel on the London-based ICE Futures Europe exchange, after adding 1.5 per cent on Tuesday. The global crude benchmark traded at a $9.14 premium to WTI.
West Texas Intermediate crude for March delivery rose 31 cents to $53.41 a barrel on the New York Mercantile Exchange at 8:40am local time after climbing as much as 79 cents earlier. The contract gained 69 cents on Tuesday to $53.10.
Oil has advanced around 18 per cent this year as the Opec+ coalition cuts production, although the rally has sputtered this month amid record American shale output and rising angst over the trade war. Goldman Sachs Group Inc. said the Organisation of Petroleum Exporting Countries’ “shock and awe” strategy of curbing supplies would push crude higher, while investors were too pessimistic on the demand outlook. In another bullish sign, US inventories were said to have fallen last week before government data due Wednesday.
“Oil is rallying further as investors were given confirmation that the Saudis will curtail output, and they see a lower chance of the trade tensions escalating at the moment,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul. “Expectations of lower American crude stockpiles added to the optimism.”
Saudi Arabia is planning to reduce its crude exports to 6.9 million barrels a day next month and pump 9.8 million barrels, Al-Falih told the Financial Times. The kingdom is seeking to acquire oil and gas assets outside the country and is no longer focused only on monetising its own resources, he said.
The possible extension of the White House’s March 1 deadline on tariffs increased investor optimism that the world’s two largest economies can resolve their trade spat, boosting stocks around the world. US and Chinese negotiators are meeting in Beijing this week.