Oil traders weigh conflicting reports on how quickly Saudi Arabia will be able to restore its lost production
Oil stabilised as traders weighed conflicting reports on how quickly Saudi Arabia will be able to restore its lost production.
Brent crude was little changed, after falling as much as 1.2 percent. Saudi Arabia, which has reiterated it will bring back all lost output by the end of September following attacks on its oil facilities, is on course to fulfill the promise, according to Reuters.
That comes after the Wall Street Journal over the weekend said repairs at damaged plants may take “many months.”
Concerns over waning demand returned after a key European manufacturing index had its worst slump since the financial crisis.
Some analysts and consultants, including Rystad Energy and FGE, have also said they are skeptical about the kingdom achieving its target. Bank of America analysts said that a delay to the return of Saudi oil output, among other factors, could push Brent above $70/bbl.
“People are going to be constantly looking for any signs that Saudi production is coming or going,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “Add to that the poor German PMI numbers and the trade situation.”
The market has been whipsawed by various data points and headlines even as geopolitical tensions mount in the Middle East. Iran’s Foreign Minister Mohammad Javad Zarif refused to rule out war following plans for increased US troops and weapons in Saudi Arabia, he said in an interview with CBS.
Manufacturing data from Germany and France fell far short of estimates, highlighting investors’ fears over the fragility of the global market. Last week, a Chinese trade delegation canceled a planned visit to farms in the US. heartlands, stirring concerns about renewed hurdles in the US-China trade negotiations.
Brent crude for November slipped 7 cents to $64.21 a barrel on the ICE Futures Europe Exchange as of 10:41am in New York, and traded at a $6.05 premium to West Texas Intermediate.
WTI for November delivery gained 5 cents to $58.14 a barrel on the New York Mercantile Exchange, after climbing 5.9 percent last week.
The attacks set off an unprecedented flurry of activity in the oil futures markets last week, with both Brent and WTI contracts setting records in weekly aggregate volume with more than 17.2 million contracts traded.
Saudi Arabia has said Iran “unquestionably sponsored” the attacks and the UK said the Islamic Republic was “very likely” behind the strikes which knocked out about 5% of global supply and led to the biggest price spike on record. The US on Friday slapped terror-related sanctions on Iran’s central bank.
Iran’s response has been a mix of defiance and an attempt to ease the tension. President Hassan Rouhani said on Sunday the Gulf nation would lay out a peace initiative for the region at the United Nations General Assembly that would involve a coalition of regional and foreign countries, while Zarif said “I’m not confident that we can avoid a war.”