Oil prices rose on Monday, lifted by comments from Saudi oil minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showing a fall U.S. drilling activity.
U.S. West Texas Intermediate (WTI) crude oil futures were at $56.43 per barrel, up 36 cents, or 0.6 percent from their last close.
Brent crude futures were at $66.21 per barrel, up 47 cents, or 0.7 percent.
Despite the gains, markets were somewhat held back after U.S. employment data raised concerns that an economic slowdown in Asia and Europe was spilling into the United States, where growth has so far still been healthy.
“Downward revisions in global growth forecasts by OECD and ECB have capped bullish gains,” said Benjamin Lu of Singapore-based brokerage Phillip Futures.
In a further sign of a slowdown, China’s auto sales fell 14 percent in February from the same month a year earlier, the country’s biggest auto industry association said on Monday, the eighth straight monthly drop in the world’s largest car market.
New energy vehicle sales, in contrast, rose 54 percent year-on-year in February, the report said.
Despite this, oil markets have generally been supported this year by ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated allies like Russia – known as the OPEC+ alliance. OPEC+ has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.
The group will meet in Vienna on April 17-18, with another gathering scheduled for June 25-26, to discuss supply policy.
Saudi oil minister Khalid al-Falih told Reuters on Sunday it would be too early to change OPEC+ output policy at the group’s meeting in April.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.
Prices were also supported by U.S. energy services firm Baker Hughes’ latest weekly report showing the number of rigs drilling for new oil production in the United States fell by nine to 834.
High drilling activity last year resulted in a more than 2 million bpd rise in production, to 12.1 million bpd reached this February, making the United States the world’s biggest producer of crude oil ahead of Russia and Saudi Arabia, with some 3.6 million bpd being exported in February.
The slowdown in drilling points to more timid output growth going forward, but because the overall drilling level remains relatively high despite the recent decline, many analysts still expect U.S. crude output to rise above 13 million bpd soon.
“This is the third straight week of decline…after a number of oil producers trimmed their spending outlooks for 2019,” ANZ bank said on Monday.