Oil climbed in New York as Saudi Arabia signaled that OPEC and its allies will keep going with production cuts despite pressure from U.S. President Donald Trump to moderate prices.
West Texas Intermediate futures advanced as much as 2.1 percent, the second daily increase since Trump’s Twitter intervention on Monday. OPEC’s most powerful member is inclined to extend the supply cuts into the second half of the year, Saudi Energy Minister Khalid Al-Falih said in Riyadh. U.S. stockpiles fell by 4.2 million barrels last week, the American Petroleum Institute was said to report, compared with a forecast for a 3 million barrel increase in a Bloomberg survey.
Crude has rallied about 24 percent this year as Saudi Arabia led an effort by the Organization of the Petroleum Exporting Countries and its allies to cut production. Venezuela’s worsening political crisis and signs the U.S. and China are getting close to a trade deal have also supported prices. While Trump’s call for cheaper oil spurred a sharp drop on Monday, the impact appears to have been temporary.
“Donald Trump tweeted and OPEC replied,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “As OPEC and its peers are seemingly resisting to comply with the request of the U.S. president, further potentially bullish danger is lurking in the background.”
West Texas Intermediate for April delivery was $1.03 higher at $56.53 a barrel on the New York Mercantile Exchange as of 7:24 a.m. local time. The contract closed little changed at $55.50 on Tuesday.
Brent for April settlement rose 89 cents to $66.10 a barrel on the London-based ICE Futures Europe exchange. The contract increased 45 cents to settle at $65.21 on Tuesday. The global benchmark crude was at a $9.56 premium over WTI.
Russia will achieve the reduction target of 228,000 barrels a day from the October baseline by the end of March or start of April, making it fully compliant with its commitment to the OPEC+ deal, Energy Minister Alexander Novak said in an interview with Gazeta.Ru on Tuesday. His comments came after data from the Energy Ministry’s CDU-TEK unit seen by Bloomberg showed smaller reductions than Novak had pledged.
The API also reported gasoline stockpiles fell by 3.8 million barrels, distillates rose 400,000 barrels and Cushing, Oklahoma, supplies increased by 2 million barrels last week. Analysts in a Bloomberg survey forecast an increase of 1.8 million barrels at Cushing.
Even as total U.S. supplies shrank, Al-Falih described inventories in the U.S. as “brimming,” and said reducing that glut remains the main goal for OPEC. The kingdom wants the group to extend its production cuts into the second half of 2019, he said, potentially pitting it against Trump’s demand to keep prices down.
Other oil-market news: Oil prices are likely to remain “ relatively high” due to lower investment in the industry since 2014, Lukoil PJSC Chief Executive Officer Vagit Alekperov told lawmakers in Moscow. A technical error at CME Group prompted a lengthy trading halt at the world’s largest exchange operator, preventing the buying and selling of contracts tied to U.S. Treasuries, stock-futures and commodities. Nabors Industries Inc., the world’s biggest owner of land oil rigs, was forced to temporarily idle most of its fleet in Venezuela amid heightened uncertainty in the Latin American country. Alberta oil producers have found a way around production limits imposed on them by the provincial government: buy the right to pump barrels from other companies that don’t need them. Exxon Mobil Corp. replaced three times its annual production in 2018, the best performance in at least a decade, continuing a bounce back from the deepest reserves cut in its modern history in 2016.