Oil extended gains above $54 a barrel after drilling activity slowed in the world’s biggest producer, while the top two crude exporters agreed to try and keep global markets in balance.
Futures rose 0.5% in New York after jumping 2.7% Friday. The number of US working rigs fell to the least since February 2018 last week, according to data from Baker Hughes. Saudi Arabian Energy Minister Khalid Al-Falih said Friday he was sure OPEC and its allies will extend output cuts into the second half of the year. His Russian counterpart, Alexander Novak, said the two countries had agreed to take coordinated action.
Crude has fallen around 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, while rising tension in the Middle East kept investors on edge. A united front from the Organization of Petroleum Exporting Countries and its allies is helping to restore some stability, but the group may find it hard to stop prices falling if the demand outlook worsens.
“Oil prices continue to swing on headline news and fundamentals have taken a back seat in the current climate,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “We continue to have trade talks that swing like pendulums.”
West Texas Intermediate futures for July rose 26 cents to $54.25 a barrel on the New York Mercantile Exchange at 10:31 a.m. in Singapore 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 added 17 cents, or 0.3%, to $63.46 a barrel on London’s ICE Futures Europe Exchange after climbing as much as 1.3% earlier. It closed up 2.6% at $63.29 on Friday. The global benchmark crude was trading at a $9.03 premium to WTI for the same month.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.