Oil gained as Saudi Arabia prepared to make a “significant” announcement following discussions with Russia over promoting market stability.
Futures gained as much as 4.3 percent in New York after Saudi Arabia and Russia agreed to work together to stabilize prices following Sunday’s meeting between Deputy Crown Prince Mohammed bin Salman and President Vladimir Putin. Saudi Energy Minister Khalid Al-Falih will make the announcement at the G20 summit in China on Monday, according to his chief of staff. Crude rose the most in two weeks on Friday as Putin said he’d like OPEC and Russia to agree to an output freeze.
“The market seems to be positioning for the vague possibility of a substantial statement” by Saudi Arabia, Axel Herlinghaus, senior commodities analyst at DZ Bank AG said by e-mail.
West Texas Intermediate for October delivery was at $46.22 a barrel on the New York Mercantile Exchange, up $1.78 at 10:01 a.m. in London. The contract rose $1.28 to $44.44 on Friday, the biggest gain since Aug. 18. Total volume traded was about 89 percent above the 100-day average.
Brent for November settlement was $2.13 higher at $48.96 a barrel on the London-based ICE Futures Europe exchange. The contract added 3 percent to $46.83 a barrel on Friday. The global benchmark crude traded at a $1.90 premium to November WTI.
Iran, which is increasing output following the end of sanctions at the start of this year, has yet to decide whether it may join a production freeze. The National Iranian Oil Co. faces no reason to restrict or cut output, state news agency Mehr said, citing Ali Kardor, a managing director at the company.
Saudi Arabia led OPEC’s decision in 2014 not to cut output amid a global glut in order to protect market share and force out higher-cost producers. Group production rose to a record 33.69 million barrels a day in August, just under a third of global demand, a Bloomberg survey showed last week.
- Oil market at “tipping point” of demand outstripping supply: BP
- OPEC Secretary-General Mohammed Barkindo will meet Iranian Oil Minister Bijan Namdar Zanganeh in Tehran in the coming week and discuss the manner of implementing a proposed OPEC production freeze plan: Mehr.
- The number of U.S. rigs drilling for oil rose by 1 to 407, the ninth increase in 10 weeks, Baker Hughes Inc. reported Friday.