Oil rose as Saudi Arabia was said to extend deep supply cuts into April.
Futures in New York climbed as much as 1.3 percent after dropping 1 percent on Friday. Saudi Arabia plans to produce well below 10 million barrels a day in April, a similar pace to March, when it cut output by 500,000 barrels a day from February, a Saudi official said. The move is the latest sign that Riyadh is determined to regain control of the oil market as prices remain well below the level that many OPEC members need to cover their government spending.
Oil has traded in a tight range above $55 this month, after rallying more than 30 percent from December-lows amid output curbs by the Organization of Petroleum Exporting Countries and its allies and unexpected supply disruptions in some member states. Meanwhile, U.S. production remains at a record high, even as the nation’s rig count fell to a 10-month low. Uncertainty over a trade tiff between the world’s top two economies has also weighed on prices.
West Texas Intermediate for April delivery rose as much as 72 cents to $56.79 a barrel on the New York Mercantile Exchange and traded at $56.68 as of 8:40 a.m. London time. The contract fell 59 cents to $56.07 on Friday.
Brent for May settlement advanced 74 cents to $66.48 a barrel on the London-based ICE Futures Europe exchange, after falling 56 cents on Friday. The global benchmark crude traded at a $9.41 premium to WTI for the same month.
With planned exports of less than 7 million barrels a day, Saudi Arabia will supply its clients with significantly less oil than they requested in April, the official said. The country’s deep production cuts show the world’s largest oil exporter is determined to re-balance the market more quickly even though events in Venezuela have left some refiners short of crude.
Elsewhere in OPEC, Libya’s production is said to be on course to hit an almost six-year high this month after the country restarted its biggest field on Tuesday.
Meanwhile, investors across financial markets continue to seek clarity on whether the U.S. and China can resolve a trade conflict. The top White House economic adviser, Larry Kudlow, said he’s “optimistic” about a trade pact despite Beijing’s push-back against demands made by Washington. Meanwhile, signs of slowing U.S. shale growth supported prices.