Oil Climbs as Saudi Arabia Seeks to Dispel Doubts Over Russia

Oil climbed, paring losses earlier this week, as Saudi Arabia moved to dispel doubts over Russia’s readiness to extend output curbs.

Futures rose 1.7 percent in New York, trimming the weekly decline to 1.2 percent, after Saudi Arabia’s Energy Minister Khalid Al-Falih said OPEC should announce an extension of output curbs when it meets on Nov. 30. Russia is said to be hesitant to commit to a decision so soon, suggesting the group waits until closer to the deal’s end-March expiry. U.S. crude output gained this week to the highest in more than three decades, according to government data.

Oil rose to the highest in more than two years last week amid near certainty that the Organization of Petroleum Exporting Countries and its allies would prolong the output deal and heightened geopolitical tension in the Middle East. The recovery has abated in the last few days after the International Energy Agency said milder-than-normal winter weather is putting a brake on demand growth. While Russia’s reluctance is causing concern, Saudi Arabia’s Al-Falih is trying to reassure the market the deal will be extended.

“He was quite clear: he is working to get a deal at the end of November,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “The U.S. data and uncertainty over Russia have been the main drivers of the oil market this week. A lot of positive news has also already been priced in, which makes it more difficult to see prices inching further up.”

West Texas Intermediate for December delivery was at $56.08 a barrel on the New York Mercantile Exchange, up 94 cents, at 1:54 p.m. in London. Total volume traded was about 60 percent above 100-day average. Prices lost 19 cents to $55.14 on Thursday.

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Brent for January settlement was 73 cents higher at $62.09 a barrel on the London-based ICE Futures Europe exchange. Prices are down 2.3 percent this week and headed for the first weekly drop since the start of October. The global benchmark was at a premium of $5.79 to January WTI.

OPEC is unlikely to reduce excess oil inventories to average levels by the time the current supply deal expires, Al-Falih said Thursday. The kingdom has had extensive consultations with Russia and the minister said he feels “fully convinced” the country will be “fully on board” when a resolution is made.

Oil-market news:

Oil exports from Iraq’s northern Kurdish region to Turkey rose to 254,000 barrels a day on Friday, according to a port agent, who asked not to be identified because the information is private. Iran’s crude oil production capacity will likely rise to 4.4 million barrels a day by 2022-23, FGE Chairman Fereidun Fesharaki wrote in an emailed note on Friday. Norway’s $1 trillion sovereign wealth fund said on Thursday that it wants to sell about $35 billion of shares in oil and gas companies to make the nation “less vulnerable” to a drop in crude prices. The recent arrests of Saudi princes and officials accused of corruption won’t harm foreign investment or the kingdom’s plan for an initial public offering of its oil company, said Al-Falih.