From Bloomberg
Saudi Arabia will cap exports at 6.6 million barrels a day
OPEC and non-OPEC to consider monitoring oil shipments
Oil rose as Saudi Arabia said it would make deep cuts to its crude exports in August and encourage better compliance with supply reductions from other producers.
Futures rose as much as 1.4 percent in New York. Saudi Arabia, OPEC’s largest producer, will limit exports to 6.6 million barrels a day in August, 1 million lower than a year earlier, Minister of Energy and Industry Khalid Al-Falih said after a meeting with fellow producers. Exports are the key metric for financial markets and a technical committee that monitors compliance with output cuts will now also study data on exports, he added.
“This is all news that’s been out there before, but he came out and threw that out there at a pretty opportune time,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York.
Oil remains in a bear market amid concern that rising global output will offset the production curbs by members of the Organization of Petroleum Exporting Countries and its allies, including Russia. The group is likely to become less compliant with its cuts toward the end of this year, with the risk of a domino effect after some members suggested they won’t adhere to their targets, according to JPMorgan Chase & Co.
West Texas Intermediate for September delivery was at $46.22 a barrel on the New York Mercantile Exchange, up 45 cents, at 9:55 a.m. in New York. Total volume traded was about 15 percent above the 100-day average.
Brent for September settlement was 48 cents higher at $48.54 a barrel on the London-based ICE Futures Europe exchange. Prices lost 1.7 percent last week. The global benchmark crude traded at a premium of $2.32 to WTI.
The deal that OPEC and its allies have implemented since Jan. 1 focused on production cuts rather than export cuts. On Monday in St. Petersburg, OPEC Secretary-General Mohammad Barkindo said OPEC was in agreement to study “other parameters.”
“From the market’s point of view, the only thing they care about is exports,” said Amrita Sen, chief oil analyst at Energy Aspects. The focus on exports will be “positive” for the oil market balances, she said.
Libya is allowed to keep increasing production and has plans to raise output as high as 1.25 million barrels a day, Al-Falih told reporters in St. Petersburg on Monday. Nigeria is ready to cap or even reduce its supply if it can maintain output of 1.8 million barrels a day, according to people familiar with the matter. Both countries are exempted from OPEC’s cuts agreement due to internal strife that hindered the recovery of their crude production.
From Reuters and CNBC
Oil rises after Saudi vows to cap crude exports next month
Oil rallied on Monday, erasing early losses after leading OPEC producer Saudi Arabia pledged to cut its exports to help speed up the rebalancing of global supply and demand.
Saudi Energy Minister Khalid al-Falih said his country would limit crude oil exports at 6.6 million barrels per day in August, almost 1 million bpd below levels a year ago.
Reports that the Saudis would slash their exports in August first surfaced last week.
International benchmark Brent crude for September delivery rose 47 cents, or 1 percent, to $48.54 a barrel by 11:51 a.m. ET (1551 GMT), having risen from an earlier session low of $47.68.
U.S. West Texas Intermediate crude for September delivery was up 48 cents, or 1.1 percent, at $46.25.
“This is the Saudis saying they view the current market conditions as too weak and they are actually delivering,” SEB commodity strategist Bjarne Schieldrop said.
“It shows real additional willing on their part to do something, which is hugely important, rather than sitting back and letting OPEC motions roll forward. They’re acting unilaterally and adding pressure.”
Falih also said the Organization of the Petroleum Exporting Countries and their non-OPEC partners were committed to extending their existing 1.8-million bpd supply reduction deal beyond next March if necessary, but would demand that any non-compliant nations stick to the agreement.
OPEC and some of its competitors met in the Russian city of St Petersburg to review market conditions and examine proposals related to their pact to cut output.
There was no discussion of deeper oil output cuts, but Falih said Nigeria, which is exempt from the deal, had signaled it was ready to cap its output once its production stabilized at 1.8 million bpd.
Nigeria’s output reached 1.7 million bpd in June, according to independent sources cited by OPEC in a monthly report.
Nigeria and Libya have been exempt from the cuts to help their industries recover from years of unrest.
“Al-Falih is striking an optimistic tone today by also saying ‘it is only a matter of time before inventories return to 5-year average’, the question for the market is how long?,” BNP Paribas head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
“With patience already being tested, a slow re-balancing of the market is unlikely to invite strong buying interest, and could lead to the early unravelling of potential summer price gains.”
OPEC and some non-OPEC states including Russia agreed to cut production by 1.8 million barrels per day (bpd) from January 2017 to the end of March 2018.
Russian Energy Minister Alexander Novak said the output deal had helped to clear 350 million barrels of additional supply from the market so far this year.
