Oil held near $54 a barrel after Saudi Arabia said it would work with Russia and other members of the OPEC+ coalition to prevent a slump in prices.
Futures were little changed in New York, after rising 2.7% on Friday. Saudi Energy Minister Khalid Al-Falih said oil producers would take “preventive steps” to stop prices from diving, after meeting with his Russian counterpart in Moscow. Meanwhile in the US, working rigs fell to the lowest level since early 2018, Baker Hughes data showed.
US crude has fallen about 18% from a peak in late April and volatility has jumped as deteriorating US-China trade relations cast a pall over the global growth outlook. Nevertheless, efforts by the Organization of Petroleum Exporting Countries and its allies to present a united front have helped restore some stability, while risk assets rallied Monday after US President Donald Trump decided not to impose tariffs on Mexico.
“Crude has been rising in early trading this morning alongside a broader market rebound, after President Trump stepped back from imposing trade tariffs,” JBC Energy analyst Michael dei Michei wrote in a report. “The latest estimate from Baker Hughes also provided some bullish impetus, with US oil rig counts seeing a significant cut last week.”
West Texas Intermediate futures for July slipped 2 cents to $53.97 a barrel on the New York Mercantile Exchange at 9:24 a.m. local time after climbing as much as 1.6% earlier. The contract jumped $1.40 to $53.99 on Friday and eked out its first weekly gain in three weeks.
Brent for August settlement dropped 30 cents to $62.99 a barrel on London’s ICE Futures Europe Exchange after advancing as much as 1.3% earlier. It closed up 2.6% on Friday. The global benchmark crude was trading at an $8.81 premium to WTI for the same month.
Russian Finance Minister Anton Siluanov warned Monday that oil prices could fall below $40 if OPEC+ countries don’t agree on an extension of cuts. Al-Falih subsequently said that “we work in order to take preventive steps so as not to allow that scenario to happen.” Al-Falih has talked up the prospects for an extension, while Russia said Friday it’ll take coordinated action with the Saudis.
The energy ministers of both countries may be in Japan for the Group of 20 summit this month, providing “an opportunity to further calibrate our positions,” Al-Falih said in an interview with Russian news service Tass. The countries have so far stopped short of making any specific commitments on output volumes once the current OPEC+ agreement expires at the end of June.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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