Crude gains as new Saudi oil minister repeats commitment to production cuts
Oil futures rose Monday after Saudi Arabia’s new energy minister signaled a continued commitment to production curbs.
West Texas Intermediate crude for October delivery CLV19, +1.95% rose 93 cents, or 1.7%, to $57.45 a barrel on the New York Mercantile Exchange. while November Brent crude BRNX19, +1.30%, the global benchmark, was up 45 cents, or 0.7%, to $61.99 a barrel on ICE Futures Europe.
Saudi Arabia’s King Salman on Sunday named one of his sons, Prince Abdulaziz bin Salman, as energy minister, replacing Khalid al-Falih, who had served as the kingdom’s top energy official since 2016.
The new Saudi energy minister “comes to office with unprecedented experience, knowledge of oil market economics/politics. He attended more OPEC meetings than any current OPEC official,” independent energy expert Anas Alhajji tweeted following the news.
Speaking on Monday, Prince Abdulaziz said the framework of Saudi policy wouldn’t change and that an agreement between the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to curb production by 1.2 million barrels a day would continue “with the will of everybody,” Reuters reported, while declining to comment on oil prices.
“The new energy minister is expected to continue his predecessor’s policy, i.e. to keep oil supply tight. In recent months, Saudi Arabia has been reducing its oil production by significantly more than it is actually required to do by the ‘OPEC+’ agreement,” said Carsten Fritsch, analyst at Commerzbank, in a note.
The OPEC+ Joint Technical Committee is scheduled to meet this week to discuss progress on the production cuts. The meeting isn’t expected to result in any changes to policy, Fritsch noted.
Even so, Alhajji said the meeting is among the most import things to watch in the oil market this month. The meeting comes ahead of the official Organization of the Petroleum Exporting Countries conference on Dec. 5. Traders will also want to see if U.S. crude inventories fall below 410 million barrels by the end of September as well as July U.S. crude production data will be released at the end of this month, said Alhajji.
Oil futures saw strong gains last week, ending Friday on a positive note after a decline in the number of active U.S. rigs drilling for crude for a third straight week. WTI, the U.S. benchmark, rose 2.6% last week, while Brent rallied 3.9%.
In other energy trade, October gasoline RBV19, +0.33% edged down by 0.06% to $1.5727 a gallon, while October heating oil HOV19, +1.38% was up 1.1% at $1.9211 a gallon.
October natural-gas futures NGV19, +3.65% rose 3.2% to $2.575 per million British thermal units.
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