Oil climbed to the highest level in almost two weeks following a report that Saudi Arabia is considering deeper export curbs.
Futures gained as much as 2 percent in New York. Consultant Petroleum Policy Intelligence said the kingdom is considering additional export curbs of as much as 1 million barrels a day following signs that OPEC’s cutbacks aren’t clearing a global glut. Supplies from OPEC members Libya and Nigeria have recovered, while Iraq’s compliance has faltered and Ecuador announced it can no longer restrain output while its economy suffers.
Libya, exempt from a deal between the Organization of Petroleum Exporting Countries and its allies to shrink a glut, is boosting production as prices in New York languish below $50 a barrel on concern ample global supplies will offset OPEC’s curbs. While no final decision has been made, Saudi Arabia is considering a unilateral reduction of its exports to counter the rise in Libyan and Nigerian output, according to U.K.-based consultants PPI.
“We think they are looking at options to speed up the rebalancing,” Bill Farren-Price, founder of PPI, said by phone. PPI’s report cited “key players in and outside for OPEC” for its assessment of Saudi Arabia’s thinking.
West Texas Intermediate for August delivery was at $46.80 a barrel on the New York Mercantile Exchange, up 78 cents, at 1:31 p.m. in London. Total volume traded was about 23 percent above the 100-day average. Prices dropped 52 cents to $46.02 a barrel Monday.
Brent for September settlement added 80 cents to $49.22 a barrel on the London-based ICE Futures Europe exchange. The contract on Monday fell 1 percent to $48.42. Prices climbed 4.7 percent last week. The global benchmark crude traded at a premium of $2.24 to WTI.
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Libya will participate in a technical meeting with fellow OPEC members as well as Russia in St. Petersburg on July 22 to share the “factors enabling and constraining Libya’s production recovery,” Mustafa Sanalla, chairman of the National Oil Corp., said on Tuesday. Supplies from Libya have increased to 1.1 million barrels a day, according to a person familiar with the matter.
OPEC member Kuwait last week said Libya and Nigeria, another country exempt from cuts, may be asked to cap their oil output amid concern about their rebounding production.
Citigroup Inc. cut its oil-price forecasts for this year and next as Libya and Nigeria restore previously halted supplies and as U.S. production climbs. It reduced projections for both Brent and WTI crudes in the second half of this year by $7 a barrel, predicting averages of $55.50 and $52.50, respectively.
Crude inventories in the U.S. decreased 3.6 million barrels in the week ended July 14, according to a Bloomberg survey before government data due on Wednesday. OPEC member Ecuador said it will start to increase its own crude output to increase revenue, a blow to the group’s unity, barely two months after it extended a deal to curb its oil output until the end of March. Output from major U.S. shale plays will reach 5.58 million barrels a day in August, an all-time high, the Energy Information Administration said in a report. U.S. President Donald Trump said the U.S. will “not stand by as Venezuela crumbles”