Oil bounced back from the lowest level since January after Saudi Arabia indicated it’ll reduce exports within weeks in a bid to extricate crude from a bear market.
Futures rose as much as 3.4% on Thursday in New York. The world’s largest oil exporter will cut foreign sales by 700,000 barrels a day in September, according to Saudi officials who asked not to be identified. The kingdom also will scale back production next month, they said. Meanwhile, a surprise jump in U.S. crude stockpiles announced on Wednesday added to concern that market is tightening.
Crude has fallen about 10% this month as deteriorating relations between China and the United States darkened an already-bleak consumption outlook. Growth in global oil demand is slowing and won’t exceed 650,000 barrels a day in 2019, according to Vitol Group.
Vitol’s Chief Executive Officer Russell Hardy said in a Bloomberg TV interview that oil markets are focused on the trade war, while “slightly under-pricing” the risk of supply disruptions in the Persian Gulf.
West Texas Intermediate oil for September delivery advanced $1.49 to $52.58 a barrel at 10:45 a.m. on the New York Mercantile Exchange after earlier reaching $52.84.
Brent for October settlement climbed $1.23 to $57.46 on the ICE Futures Europe Exchange. The benchmark global crude traded at a premium of $4.98 to WTI for the same month.
Saudi Arabia has already cut production more than required under an agreement between the Organization of Petroleum Exporting Countries and allies. Planned gatherings in Abu Dhabi early next month will be critical for leaders of the OPEC+ group to signal their intentions on production, said Helima Croft, chief commodities strategist at RBC Capital Markets.
U.S. crude inventories rose by 2.39 million barrels in the week through Aug. 2, compared with the median estimate for a 2.7 million-barrel decline in a Bloomberg survey. Gasoline stockpiles also climbed, an alarming development during what is typically the peak summer driving season.