SINGAPORE (Reuters) – Oil prices rose more than one per cent on Monday after the highest exporter, Saudi Arabia, announced a December supply cut, which was a measure that was likely to aim to prevent the market that came to me down by 20 per cent since the beginning of October.
There is a pumpkin in the sun outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS / Christian Hartmann
Blaenau LSCc, the future of the Brent raw future, a benchmark for global oil prices, was $ 71.37 per barrel at 0531 GMT, up to $ 1.19, or 1.7 percent, from its last end.
The United States West Texas Intermediate (WTI) raw future was $ 60.87 per barrel, 68 cents up, or 1.1 percent.
Saudi Arabia intends to reduce oil supply to world markets by 0.5 million banned a day (bpd) in December, said its energy minister on Sunday, as OPEC's power is facing uncertain prospects in ensuring that other producers agrees to cut coherent output.
Khalid al-Falih told reporters that Saudi Aramco's customer nominations would fall from 500,000 pd in December against November due to the less seasonal demand. The cut represents a drop in a global oil supply of around 0.5 per cent.
Saudi Arabia is the de facto leader of the Institute of Petroleum Exporting Countries (OPEC).
Peter Kiernan, lead energy analyst at the Intelligence Economist Unit in Singapore, said OPEC was "focusing on mitigation of disadvantage risks" after reducing crude prices by around 20 per cent over a month following supply surges, especially by the three best producers in the United States United States, Russia and Saudi Arabia.
"Saudi Arabia has stepped in front of the enemy's oil market, announcing proactively that they will reduce exports," said Stephen Innes, head of trading for Asia-Pacific on the Oanda's future brokerage in Singapore.
Great concern to Saudi Arabia and other traditional OPEC producers with the majority of the Middle East is the surge in U.S. output.
Energy companies and the United States last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total to 886, the highest level since March 2015, Baker Hughes's energy services company said on Friday.
The rig account shows that the United States C-OUT-T-EIA raw output, which is already in the 11.6 million pd record, is increasing further.
"One thing that is absolutely clear, OPEC is for shaggy chocolate as the US raw production rises to 11.6 million barrels a day and will cross the 12 million threshold next year," said Innes.
Report by Henning Gloystein; edited by Richard Pullin