ABU DHABI - Following a record run of losses, oil climbed at the start of the week as Saudi Arabia said it would reduce crude sales in December and speculation rose that OPEC and its allies will cut output next year.
While futures in New York climbed as much as 1.3 percent Monday, they are still down about 20 percent from a 2014 high reached early last month. Top OPEC member Saudi Arabia said it will curb exports by 500,000 barrels a day next month, and a committee of OPEC and its partners warned over the weekend that it might need “new strategies,” raising the prospect of a wider cut in 2019.
The Saudis are taking the lead to counter a price rout, which has put pressure on OPEC and its allies including Russia to cut output as signs of a supply glut emerge in the U.S. — which is pumping at a record. Oil collapsed into a bear market as fears of a crunch eased after America granted waivers for some nations to continue buying Iranian crude even after the Trump administration hit the Middle East nation with sanctions.
“While the Saudis said it’s too early to go ahead with discussions on production cuts, Russia said supply exceeding demand is a seasonal factor, signaling it’s not necessarily keen to cut output,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp., predicting “many twists and turns” before OPEC’s next meeting in December. “Still, markets have gotten the message production cuts are likely if oil keeps falling.”
Demand for Saudi oil is “tapering off” in part because of seasonal factors, so the kingdom will ship less, Saudi Energy Minister Khalid al-Falih told reporters Sunday in Abu Dhabi, where the committee that oversees the 2016 agreement between OPEC and its allies to manage supply met.