BackOil up more than $1 after Saudis raise prices to Asia
Saudi raises crude prices to Asia for 2nd month; Iran unlikely to ramp up exports before 2016, say analysts
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Singapore: Oil futures rose more than $1 a barrel on Monday, after Saudi Arabia raised prices for crude sales to Asia for a second month, signalling better demand in the region.
International benchmark Brent regained ground after tumbling as much as 5 percent on Thursday, when a preliminary nuclear deal was finally reached between world powers and Iran. More Iranian oil could enter global markets if that is followed by a comprehensive deal by June.
Analysts warned a ramp-up in exports, however, could take months and would likely not happen before 2016.
“While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a note.
“Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said.
Brent crude for May delivery touched a high of $56.06 a barrel and was up 70 cents from Thursday at $55.65 by 0347 GMT. US crude for May delivery was 87 cents higher at $50.01 a barrel, after earlier touching $50.35.
There were no settlement in either Brent or US crude futures on Friday. Markets were closed for the Easter holiday.
World’s top exporter Saudi Arabia kept output steady and cut its official selling prices (OSPs) sharply late last year in a fight for market share during a global supply glut.
Its ability to raise prices for April and May suggests its strategy is working, although competition has kept its flagship Arab Light at a discount to Oman/Dubai quotes, analysts said.
“There is still competition for the Asia market even though it is also a sign that some of the production elsewhere is less able to compete in the market right now," Shunling Yap, a senior oil and gas analyst at BMI Research.
On the supply front, the number of rigs drilling for oil in the United States declined by 11 this week to 802, the smallest decline since December, a weekly survey by oil service firm Baker Hughes showed on Thursday.
Two weeks of small declines in the US rig count have raised expectations that drilling activity is nearing a level that could dent output, bolster prices and coax rigs back to the field after a precipitous cull since October. Reuters
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