Aramco's Ras Tanura oil refinery and oil terminal in Ras Tanura
Pipes containing oil stand at the North Pier terminal of Aramco's Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia . Image Credit: Bloomberg

Riyadh: Oil steadied near $54 a barrel after Saudi Arabia said it could agree on plans for production with Russia at the G-20 summit this month.

Futures traded 0.1 per cent higher, after earlier adding as much as 1.6 per cent. There’s almost unanimous agreement in Opec to extend production cuts, and holdout Russia could come on board before the deal’s expiry at the end of June, Saudi Arabia’s Energy Minister Khalid Al Falih said in an interview with Russian news service Tass.

Al Falih and his Russian counterpart, Alexander Novak, may both be in Japan for the G-20, which could provide a chance to “calibrate” their positions, he said. US working rigs fell to the least since early 2018 last week, Baker Hughes data show.

Crude has fallen around 18 per cent from a peak in late April and volatility has jumped as deteriorating US-China trade relations cast a pall over the global growth outlook, while rising tension in the Middle East kept investors on edge. A united front from the Organisation of Petroleum Exporting Countries and its allies is helping to restore some stability, while broader risky assets were rallying Monday on relief that President Trump didn’t impose tariffs on Mexico.

“Crude has been rising in early trading this morning alongside a broader market rebound, after President Trump stepped back from imposing trade tariffs on Mexican goods late last week,” JBC Energy analysts including Michael dei Michei wrote in a report. “The latest estimate from Baker Hughes also provided some bullish impetus with US oil rig counts seeing a significant cut last week.”

West Texas Intermediate futures for July rose 6 cents to $54.05 a barrel on the New York Mercantile Exchange at 10:39am in London after climbing as much as 1.6 per cent earlier. The contract jumped $1.40 to $53.99 on Friday and eked out its first weekly gain in three weeks.

Brent for August settlement fell 13 cents, or 0.2 per cent, to $63.16 a barrel on London’s ICE Futures Europe Exchange after advancing as much as 1.3 per cent earlier. It closed up 2.6 per cent at $63.29 on Friday. The global benchmark crude was trading at a $8.95 premium to WTI for the same month.

American working rigs fell by 11 to 789 in the week through June 7, according to the Baker Hughes data. That was the fourth drop in five weeks and takes the decline this year to 96.

While Saudi Arabia and Russia appeared to be in agreement on extending output cuts, they stopped short of any specific commitments on production volumes when the current agreement expires at the end of June. Al Falih said on Monday that the Saudi and Russian positions on oil have been close.