Crude oil storage tanks from above at the Cushing Oil Center, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford
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LONDON (Reuters) – Oil rose $1 a barrel on Tuesday, with tighter supply back into focus as Saudi Arabia floated the idea of OPEC+ production cuts to support prices and a possible drop in US crude inventories.
On Monday, the Saudi Press Agency reported that the Saudi energy minister said that OPEC+ had the means to deal with challenges including production cuts, citing comments made by Abdulaziz bin Salman to Bloomberg in an interview. Read more
Brent crude, the global benchmark, rose 77 cents, or 0.8 percent, to $97.25 a barrel by 0814 GMT. US West Texas Intermediate crude rose 94 cents, or 1.0%, to $91.30.
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“Whether the post-September OPEC or OPEC+ production cut is justified or not,” said Tamas Varga of BVM oil brokerage. “Despite the recent weakness caused by inflation, the oil market appears to have found a bottom recently.”
Oil rallied in 2022, approaching an all-time high of $147 in March after the Russian invasion of Ukraine, exacerbating supply concerns. Since then, concern about a global recession, rising inflation and weak demand have weighed on prices.
It also highlights the possibility of concluding a nuclear agreement between Iran and world powers that would allow Iran to increase oil exports. A senior US official told Reuters on Monday that Iran has given up some of its key demands on reviving the deal. Read more
While the price of Brent crude futures has fallen sharply from this year’s high, the market structure and price differentials in the actual oil market still indicate tight supply.
In comments reported on Monday, the Saudi minister said the paper and natural oil markets had become “separate”.
To confirm the tight supply, the latest weekly US inventories report is expected to show a 1.5 million barrel drop in crude stocks. The first two reports for this week were released at 2030 GMT from the American Petroleum Institute.
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(Additional reporting by Stephanie Kelly and Moyo Shaw); Editing by Simon Cameron Moore and Clarence Fernandez
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