Oil rose to the highest in more than a week after Saudi Arabia was said to plan extending deep supply curbs and a nationwide blackout sparked a production collapse in Venezuela.
Futures climbed as much as 1.2 percent in New York to the highest since March 1. A Saudi official said the world’s top crude exporter plans to pump well below 10 million barrels a day in April, stretching deeper-than-agreed cuts into a second month. Meanwhile, fellow OPEC member Venezuela’s output has slumped as electrical problems were making it difficult to operate wells, according to a senior official at the country’s oil ministry.
Crude has stayed above $55 a barrel since mid-February as the Organization of Petroleum Exporting Countries and its allies agreed to cap supply to ease a supply glut and Venezuelan output slides. Still, there are worries over booming U.S. shale supply. The International Energy Agency estimates America will account for 70 percent of the growth in global oil supply capacity through 2024. Meanwhile, risk assets across financial markets were buoyed after the U.K. struck a new deal for its exit from the European Union.
“Venezuela’s oil exports are under pressure,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. In addition, “oil prices are continuing to receive tailwinds from yesterday’s announcement by Saudi Arabia that it will significantly restrict oil supply in April. This shows Saudi Arabia’s resolve to keep the oil market balanced by keeping oil supply tight.”
West Texas Intermediate for April delivery rose as much as 67 cents to $57.46 a barrel on the New York Mercantile Exchange, and traded for $57.35 as of 10:42 a.m. London time.
Brent for May settlement added 69 cents to $67.27 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 84 cents to $66.58 on Monday. The global benchmark crude traded at a $9.57 premium to WTI for the same month.
Saudi Arabia’s production cut means the country will ship less than 7 million barrels a day in April, significantly less than the 7.6 million barrels a day its customers requested, the Saudi official said.
The IEA released its U.S. output forecast in a report before officials from OPEC and North American shale companies sat down for a dinner on the sidelines of CERAWeek by IHS Markit, the annual gathering in Houston of some of the energy industry’s biggest names. Earlier at the event, secretary general of the cartel Mohammad Barkindo said bringing supply and demand back into equilibrium remains a “work in progress.”
In the U.K., Theresa May made a last-minute decision to fly to Strasbourg, France, for late talks with European Commission President Jean-Claude Juncker. While the two leaders announced changes they both aim to put an end to the lengthy negotiations for Britain’s exit from the 28-country bloc, it remains to be seen if the new wording will convince her country’s lawmakers to sign off on the plan in a crunch vote Tuesday night.
Other oil-market news: U.S. crude stockpiles probably gained 3 million barrels last week, according to a Bloomberg survey. Brazilian oil giant Petrobras is looking to pocket undeveloped reserves instead of cash as compensation for a deep-water contract review that is nearing a conclusion, said Chief Executive Officer Roberto Castello Branco. Royal Dutch Shell Plc is on the hunt for deals to bulk up its position in the Permian Basin, where it lags rivals Exxon Mobil Corp. and Chevron Corp.