Oil traded above $49 a barrel in New York after Saudi Arabia was said to cut crude sales to Asian buyers as part of its pledge to reduce exports and shrink a global glut.
Futures rose 0.7 percent after dropping Monday. Saudi Arabia will supply lower volumes than some customers requested for September, with the cuts spanning grades, people with knowledge of the matter said. In Abu Dhabi, officials from Russia and Kuwait are meeting producers to examine why some are shirking pledges to curb output, while in the U.S., stockpiles may have fallen last week.
Oil in New York rose above $50 a barrel early last week, before slipping as signs of rising global supply eroded optimism that curbs by the Organization of Petroleum Exporting Countries and its partners are rebalancing the market. The failure of OPEC’s efforts amid expanding output in Libya and Nigeria and lower compliance by some nations has spurred Saudi Arabia to take more action.
Prices “are profiting from Saudi Arabia’s announcement that it will be reducing its oil shipments,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “This announcement is remarkable to the extent that domestic demand declines in September, meaning that more crude oil will be available for export if production remains unchanged.”
West Texas Intermediate for September delivery was at $49.73 a barrel on the New York Mercantile Exchange, up 34 cents, at 10:45 a.m. London time. Total volume traded was about 11 percent above the 100-day average. Prices lost 19 cents to $49.39 on Monday.
Brent for October settlement gained 31 cents to $52.68 a barrel on the London-based ICE Futures Europe exchange, after losing 5 cents on Monday. The global benchmark crude traded at a premium of $2.81 to October WTI.
In Abu Dhabi, talks are being held with representatives from Iraq, the United Arab Emirates and Kazakhstan, according to people familiar with the matter. Findings will be presented to the Joint Ministerial Monitoring Committee which oversees the agreement to cut production. Compliance with the deal by OPEC members slid to 78 percent in June, according to the International Energy Agency.
“We see oil prices spending more time in the high 40s than low 50s, simply because the market is set to remain amply supplied,” said Norbert Ruecker, head of commodities research at Julius Baer Group Ltd. in Zurich, citing “OPEC supply-deal loopholes and shale growth.”
U.S. crude stockpiles probably declined by 2.1 million barrels last week, a Bloomberg survey showed before government data Wednesday. China’s July crude imports fell to the lowest in six months after heavy buying earlier in the year, according to data from the General Administration of Customs. Libya’s biggest oil field Sharara is “back to normal” after a disruption caused by protests in the politically fragmented country, the state National Oil Corp. said.