Oil price breaks above $60, but doubts about cut gains
All eyes are on this week’s G20 summit in Argentina to be attended by Saudi Arabia and Russia, and an Opec meeting in Vienna thereafter to consider oil production cuts
New York: Oil prices rose nearly 3% on Monday, clawing back some of last week’s steep losses, but gains were capped by uncertainty over global economic growth and further signs of increasing supply, including record Saudi production. Brent crude futures rose $1.68 to settle at $60.48 a barrel, a 2.9% gain. US West Texas Intermediate (WTI) crude gained $1.21, or 2.4%, to close at $51.63 a barrel.
Prices on Friday hit their lowest since October 2017 amid intensifying fears of a supply glut. Brent sank to $58.41 a barrel, while WTI fell to $50.15 a barrel.
“We are reluctant to read much into today’s oil price advance given a much oversold technical condition that needed only a moderate stock market rally to force some short covering,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Supporting oil prices, US stock markets broadly rallied as Cyber Monday, the largest online shopping day of the year, began. Crude futures sometimes track with the equities market.
Prices found some support as crude stockpiles at the delivery point for WTI at Cushing, Oklahoma, rose just 126 barrels from Tuesday to Friday, traders said, citing a report from market intelligence firm Genscape.
However, demand concerns and record output from Saudi Arabia limited Monday’s rebound.
Saudi crude oil production hit 11.1-11.3 million barrels per day (bpd) in November, an all-time high, an industry source said.
A rising dollar that has undercut demand in key emerging market economies, higher borrowing costs and the threat to global growth from the trade dispute between the United States and China have pushed investors out of assets more closely aligned with the global economy, such as equities or oil.
Hedge funds and other money managers raised their bullish position on US crude for the first time in 8 weeks in the week that ended 20 November, the US Commodity Futures Trading Commission (CFTC) said on Monday. The increase was the first since September and lifted net longs from their lowest point in more than a year.
Market participants are looking ahead to a 6 December meeting of the Organization of the Petroleum Exporting Countries (Opec) in Vienna. Saudi Arabia is expected to push for a production cut of up to 1.4 million bpd by Opec and its allies.
Goldman Sachs said on Monday that the G20 meeting this week could be a catalyst for a rebound in commodities prices, possibly prompting a thaw in US-China trade tensions and offering greater clarity on a potential Opec oil cut. Goldman believes Opec and other nations will come to an agreement, leading to a recovery in Brent prices.
“While we didn’t think that Brent prices were justified at $86 per barrel, neither do we believe that they are at $59 with our 2019 Brent forecast at $70,” Goldman said.
Reuters’s Amanda Cooper in London and Henning Gloystein in Singapore contributed to this story.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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