- Crude Oil Gains as Saudi Lowers Export for September
Oil prices surged the most in a month after Saudi Arabia said it would lower crude production and exports in September.
Saudi Arabia, one of the world’s top exporters of crude oil, plans to export below 7 million barrels a day in September.
Oil prices had plunged to a seven-month low last week amid the US-China trade war and other global happenings like the Brexit, Libya civil unrest and the Venezuela sanctions by the USA.
The uncertainty weighed on commodity outlook as investors in the energy sector cut down on new investment due to the inability of the US and China to reach an agreement on trade after almost 3 years of back and forth discussions.
Saudi Arabia had pegged its 2019 oil benchmark at $70 a barrel but with crude oil trading about 32 percent lower than its project, the Kingdom needs higher prices to fund its 2019 budget or result to borrowing.
Therefore, the Kingdom was forced to cut back on production and exports in order to curtail further fall in prices and support the overall commodity market amid rising global risk.
The US WTI jumped 3.7 percent to $54.50 a barrel during the New York trading hours on Friday to pare its weekly loss to 2.7 percent. While Brent crude, against which Nigerian oil is priced, gained $1.15 to $58.53 barrel.
Despite the surged in oil prices the International Energy Agency lowered its 2019 and 2020 oil-demand projection, saying demand outlook ‘fragile’.
“Demand concerns are overshadowing everything else,” said John Kilduff, partner at Again Capital LLC. “The trade war is only worsening; it’s escalated significantly over the past few weeks.”
Saudi Arabia decision to produce and export below market demands in September boosted market outlook temporarily.