President Donald Trump and King Salman bin Abdulaziz of Saudi Arabia spoke on the phone Saturday and discussed efforts to maintain supplies to ensure stability of the market and growth of the global economy
Oil extended gains after the longest quarterly rally in a decade as a slowdown in American drilling added to supply risks while the US and Saudi Arabia discussed market stability.
Brent crude in London rose as much as 0.6 percent, after ending the previous quarter 4.1 percent higher.
President Donald Trump and King Salman bin Abdulaziz of Saudi Arabia spoke on the phone Saturday and discussed efforts to maintain supplies to ensure stability of the market and growth of the global economy, Al Arabiya TV reported. Working oil rigs dropped by three to 863 last week, according to Baker Hughes data Friday.
Oil has rallied to the levels last seen in 2014 as concerns over a supply crunch grew on output disruptions from Iran to Venezuela. With top traders seeing oil above $100, speculation there may not be enough spare capacity is keeping investors nervous before American sanctions on Iran kick in next month.
Still, oil majors like BP Plc and Total SA cautioned that such a rally may not be sustainable as escalating trade tensions between the US and China may weaken demand.
“In the short term, it’s very clear that the risks to oil are to the upside,” said Wayne Gordon, Singapore-based executive director for commodities and foreign exchange at UBS Group AG’s wealth management unit.
“We’re in a supply-constrained market now, for at least the next quarter into 2019. Any geopolitical tension that we don’t foresee coming, with such low spare capacity, is the thing that would push oil to $100 a barrel,” he said in a Bloomberg TV interview.
West Texas Intermediate for November delivery traded at $73.63 a barrel on the New York Mercantile Exchange, up 38 cents, at 10:40 a.m. in Singapore. The contract climbed $1.13, or 1.6 percent, on Friday. Total volume traded was about 56 percent below the 100-day average.
Brent for December settlement increased 51 cents at $83.24 on the ICE Futures Europe exchange. The November contract, which expired on Friday, settled 1.2 percent higher. The global benchmark traded at a $9.81 premium to WTI.