Oil climbed for a second day after Saudi Arabia pledged to deepen production cuts and U.S. President Donald Trump said he might extend a deadline for additional tariffs on China.
Futures in New York added as much as 1.2 percent after rising 1.3 percent Tuesday. The world’s biggest oil exporter will continue to curb output more than required by a December deal among top producers, Energy Minister Khalid Al-Falih told the Financial Times Wednesday. Trump said he’s open to extending the March 1 deadline if the U.S. and China are close to a trade agreement.
Oil has advanced around 18 percent this year as the OPEC+ coalition cut production, although the rally has sputtered this month amid record American shale output and the rising angst over the trade war. Goldman Sachs Group Inc. said the Organization of Petroleum Exporting Countries’ “shock and awe” strategy of curbing output would push crude higher, while investors were too pessimistic on the demand outlook. In another bullish sign, U.S. inventories were said to have fallen last week before government data due Wednesday.
“Oil is rallying further as investors were given confirmation that the Saudis will curtail output, and they see a lower chance of the trade tensions escalating at the moment,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul. “Expectations of lower American crude stockpiles added to the optimism.”
West Texas Intermediate crude for March delivery rose 38 cents to $53.48 a barrel on the New York Mercantile Exchange at 8:15 a.m. in London after being up as much as 65 cents earlier. The contract rose 69 cents on Tuesday to $53.10.
Brent for April settlement added 54 cents to $62.96 a barrel on the London-based ICE Futures Europe exchange. It climbed 1.5 percent to settle at $62.42 on Tuesday. The global crude benchmark traded at a $9.11 premium to WTI.
Saudi Arabia is planning to reduce its crude exports to 6.9 million barrels a day next month and pump 9.8 million barrels, Al-Falih told the Financial Times. The kingdom is seeking to acquire oil and gas assets outside the country and is no longer focused only on monetizing its own resources, he said.
The possible extension of the White House’s March 1 deadline on tariffs increased investor optimism that the world’s two largest economies can resolve their trade spat, boosting Asian stocks and currencies. U.S. and Chinese negotiators are meeting in Beijing this week.
Other oil-market news: American Petroleum Institute data was said to show oil inventories fell by almost 1 million barrels last week, according to people familiar with the report. That would be the first drop in a month if confirmed by the Energy Information Administration figures due Wednesday. Analysts in a Bloomberg survey had projected a 2.4 million barrel increase. OPEC Secretary-General Mohammad Barkindo urged countries in the group and its allies to follow through on their pledges to cut oil production and keep global markets balanced. U.S. sanctions that have effectively blocked American imports of Venezuelan oil are leading to a crude-price surge thousands of miles away in China.