Oil Rises as OPEC Signal on Output Curbs Counters Trade Risk
Bloomberg
Published May 21, 2019 11:19
Updated May 21, 2019 12:57
Oil Rises as OPEC Signal on Output Curbs Counters Trade Risk
(Bloomberg) -- Oil rose on signs OPEC and its allies will extend production cuts beyond June, while a steadily deteriorating U.S.-China trade relationship kept prices from pushing higher.
Futures increased 0.7% in New York after closing up 0.5% on Monday. Saudi Energy Minister Khalid Al-Falih urged the OPEC+ coalition to “stay the course” on output limits after a meeting in Jeddah over the weekend. Yemeni rebels backed by Iran said they’d attacked an airport in southern Saudi Arabia, further stoking tensions in the Middle East, while China warned it could retaliate against the U.S. after Washington blacklisted Huawei Technologies Co.
The possible extension of supply curbs by the Organization of Petroleum Exporting Countries and its allies could be a catalyst for oil to resume this year’s rally, which has floundered over the past month. Rising tension in the Middle East and involuntary output cuts from Venezuela to Russia have also been aiding prices. But rising stockpiles in the U.S. and the breakdown in relations between the world’s two biggest economies are keeping gains in check.
“OPEC+ is staying on the sidelines for now, reluctant to add significant volumes to markets so long as overall measures of inventories remain apparently adequate,” Citigroup Inc (NYSE:C). analysts including Ed Morse wrote in a report. The bank is “cautiously optimistic a trade war today will result in at least an interim trade deal this year.”
West Texas Intermediate crude for June delivery, which expires Tuesday, gained 42 cents to $63.52 a barrel on the New York Mercantile Exchange at 11:09 a.m. in London, after adding 34 cents on Monday. The more actively traded July contract rose 0.7% to $63.68.
Brent for July settlement increased 35 cents to $72.32 a barrel on the London-based ICE (NYSE:ICE) Futures Europe exchange, after dropping 24 cents on Monday. The spread between the first and second month contracts is in strong backwardation, where prompt prices are higher than later-dated prices, indicating tight supply. The global crude benchmark traded at a $8.63 premium to WTI for the same month.
Oil ministers from Saudi Arabia and other OPEC producers said at their meeting over the weekend that they were inclined to extend the production cuts into the second half of 2019. Al-Falih said the kingdom “isn’t fooled” by crude prices and believes the market is still fragile. While suggesting he is open to relaxing the cuts, Russian Energy Minister Alexander Novak said his country would still comply with any agreed output limit until year-end.
Get The App
Zhang Ming, China’s envoy to the European Union, said the Trump administration’s move against Huawei is “wrong behavior” and an “abuse of export-control measures,” as he warned there would be a “necessary response.” U.S. President Donald Trump said he was “very happy” with the trade war and that China wouldn’t become the world’s top superpower on his watch.
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.