November 10, 2017 by Ben Sharples and Rakteem Katakey
Oil is heading for a fifth weekly advance as political upheaval in the world’s biggest crude exporter countered an expansion of U.S. output to the highest level in more than three decades.
Futures were little changed in New York, up 2.8 percent for the week. Arrests on the weekend of senior Saudi Arabian officials in an anti-corruption probe is seen as consolidating power for Crown Prince Mohammed bin Salman, who supports extending OPEC-led output cuts. While prices eased during the week, record weekly U.S. oil production and a surprise increase in crude stockpiles weren’t enough to peg back Monday’s 3.1 percent surge.
Oil is heading for the longest run of weekly gains since October 2016 as global supplies tighten and on signs the Organization of Petroleum Exporting Countries will extend output curbs past the end of March. Saudi Arabia on Thursday advised its nationals to leave Lebanon, fueling fears of a confrontation with Iran in a country long known for being a battleground for proxy wars in the Middle East.
“Geopolitical risks have taken center stage in the oil market again,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “The rising tensions between Saudi Arabia and Iran have raised concerns in the oil market of an imminent supply disruption.”
West Texas Intermediate for December delivery rose 1 cent to $57.18 a barrel on the New York Mercantile Exchange at 8:53 a.m. local time. Total volume traded was about 34 percent below the 100-day average. Prices added 36 cents to $57.17 on Thursday.
Brent for January settlement gained 13 cents to $64.06 a barrel on the London-based ICE Futures Europe exchange. Prices are up 3.2 percent this week, set for a fifth weekly gain. The global benchmark crude was at a premium of $6.65 to January WTI.
Saudi Arabia said it plans to cut crude exports to all the regions it ships to next month. Shipments will fall by 120,000 barrels a day in December from November, a spokesman for the Energy Ministry said, without specifying what those levels would be. Bloomberg calculations from vessel-tracking data estimated flows in October at 6.989 million a day.
An international rush is on for Mexico’s offshore oil riches led by Exxon Mobil Corp. and Royal Dutch Shell Plc. Companies are lining up to bid in the country’s Jan. 31 deep-water auction. The operating rate at Chinese independent refineries rose to 66.46 percent of capacity this week, the highest since 2016, according to data provided by industry researcher SCI99.