Futures in New York rose a fourth day, and are up 3.8% for the week. Russia said it would accelerate output cuts agreed to in a deal with the OPEC+ coalition, while Saudi Arabia stopped production at the Safaniyah offshore field this week after an accident damaged the facility’s main power cable, Energy Intelligence Group reported.
Asian stocks fell on Friday as the US and China were said to have made little progress in trade talks this week in Beijing.
Oil has resumed its rally this week -- taking its advance this year to around 21% -- as the Organization of Petroleum Exporting Countries and its allies reaffirmed their intention to cut production to bolster prices. Sanctions on Iran and Venezuela are also limiting output and driving up prices of the world’s dirtier and heavier crudes. Still, record production and rising inventories in the US, together with prospects for weaker global growth, are capping gains.
“It’s a grim reality that a concern on demand exists, but investors are focusing more on the possible supply will tighten,” said Takayuki Nogami, chief economist at Japan Oil, Gas, and Metals National Corp. “While it will take some time before crude demand starts slowing down, supply from countries including Saudi Arabia, Venezuela, and Russia has already begun falling.”
Venezuelan exports are facing an additional threat as the White House is considering blocking foreign entities from dealing with the country’s state oil giant Petroleos de Venezuela SA. The move would be a possible next step as the US seeks to choke off President Nicolas Maduro’s power.
West Texas Intermediate for March delivery rose 31 cents to $54.72 a barrel on the New York Mercantile Exchange at 12:48 PM in Singapore. It advanced as much as 60 cents, or 1.1%, earlier, and is up $2 for the week.
Brent for April settlement climbed 42 cents to $64.99 a barrel, near the highest level since November, on the London-based ICE Futures Europe exchange. It gained 4.7% for the week. The global benchmark crude was at a $9.89 premium to WTI for the same month.
Russia is accelerating its implementation of the oil-production cuts agreed with OPEC and has already curbed output by about 140,000 barrels a day since December, Energy Minister Alexander Novak said on Thursday. While Russia has previously lagged behind other members in the producer group, Novak’s statement is in line with Saudi Arabia’s pledge this week to deepen reductions.
Saudi Arabian Oil Co.’s Safaniyah offshore field, where the unplanned outage was reported, has the capacity to pump 1.2-1.5mn barrels of crude a day, EIG said in the report that cited people familiar with the matter. Saudi Aramco, as the state-owned energy giant is known, is repairing the subsea cable, and the field could be offline until March, according to the report. Aramco’s press office didn’t respond to an email sent outside normal business hours seeking comment.
Asian equities retreated from near their highest level since October as investors questioned the potential for a deal on trade between the US and China. President Donald Trump is reportedly considering delaying a March 1 deadline for additional tariffs on Chinese imports by 60 days, which would give the two sides more time to reach an agreement.
American refiners, gasping for profits under a glut of gasoline inventories, are hoping to find relief this spring when more drivers take to the roads. The Cboe/Nymex Oil Volatility Index fell 2.9% in the week through Thursday, set for the seventh week of declines.