Oil rises as Opec, allies signal continued production cuts

Bloomberg

Oil rose after Saudi Arabia and other Opec+ members signalled their intention to keep supplies constrained, while US President Donald Trump ratcheted up tensions with Iran.
Futures in New York jumped as much as 1.7%, before paring some of those gains. Saudi Energy Minister Khalid Al-Falih urged members of Opec+ gathered in Jeddah to “stay the course” on output cuts. Meanwhile, just weeks after the US tightened sanctions on Iranian crude exports, Trump tweeted: “If Iran wants to fight, that will be the official end of Iran.”
Oil has rallied almost 40% this year as production cuts outweigh demand concerns caused by trade tensions between the US and China. Saudi Arabia and fellow oil producers have to balance their desire to maintain high crude prices with the need to fill any supply gaps caused by rising geopolitical risks and disruptions in Venezuela, Libya and Iran.
“We need to stay the course, and do that for the weeks and months to come,” Saudi Arabia’s Al-Falih told reporters after the meeting in Jeddah. The kingdom “isn’t fooled” by crude prices and believes the market is still fragile.
Meanwhile, Russian Energy Minister Alexander Novak sent mixed signals. Russia, the most important non-Opec partner in the coalition, is ready to consider easing production cuts if the market needs more crude, Novak said.
Still, Russia would comply with any agreed output limit in the second half of 2019, he said.
In the US, working oil rigs fell by three to 802 last week, the lowest since March 2018, according to oilfield-services provider Baker Hughes. Government data last week showed US crude production dropped for a second week to 12.1 million barrels a day.
“Prices will ultimately need to go higher,” but “Opec is walking a bit of a tightrope here,” Morgan Stanley analyst Martijn Rats said in a Bloomberg Television interview. “On the one hand, we have some meaningful risks to supply in a number of countries — Iran, Venezuela, potentially Libya — but then on the other hand, we also have some demand weakness coming through.”
West Texas Intermediate crude for June delivery rose as much as $1.05 to $63.81 a barrel on the New York Mercantile Exchange, and traded at $62.96 in London. The contract added 1.8% last week, the biggest weekly increase since early April.
The June contract expires on Tuesday. The more actively traded July contract rose to as high as $63.96.