Futures advanced as much as 1.6 percent in New York, adding to Friday’s 1.5 percent increase after prices fell to the weakest since November. While U.S. shale output growth has slowed the impact of cuts, producers are determined to reduce a global glut, Al-Falih said in Kuala Lumpur. Goldman Sachs Group Inc. and Citigroup Inc. said the market is tightening and that the selloff last week to the lowest in five months wasn’t based on fundamentals.
Oil capped a third weekly loss last week after dropping to levels last seen before the Organization of Petroleum Exporting Countries agreed in November to reduce production. OPEC will meet May 25 to decide whether to extend supply cuts through the second half of the year as concerns mount its efforts to trim a global glut are being overwhelmed by rising U.S. supply.
“The demand picture remains modestly constructive,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “The negativity last week, in particular concern about demand, may have been overdone. We expect the inventory situation to right itself, but that’s been a very slow process so far.”
West Texas Intermediate for June delivery rose as much as 76 cents to $46.98 a barrel before Al-Falih’s comments on the New York Mercantile Exchange and traded at $46.37 at 7:40 a.m. in London. Total volume traded was about 45 percent above the 100-day average. The contract gained 70 cents to $46.22 on Friday, trimming the weekly loss to 6.3 percent.
Brent for July settlement was 18 cents higher at $49.28 a barrel on the London-based ICE Futures Europe exchange after climbing as much as 1.7 percent earlier. Prices slid 5.1 percent last week. The global benchmark crude traded at a premium of $2.55 to July WTI.
The global oil market will soon rebalance and return to a “healthy state,” Al-Falih said at the Asia Oil and Gas Conference on Monday. This is the first time the Saudi minister has suggested curbs could be extended beyond 2017.
“The market is really fundamentally tightening up,” Citigroup’s Head of Commodities Research Ed Morse said in a Bloomberg interview on Friday. “It’s never possible to call a bottom, but I suspect this is a great buying opportunity” before a big jump in prices by the end of the year, he said.
- China’s April crude imports fell from a record to 8.4 million barrels a day, the General Administration of Customs in Beijing said on its website.
- U.S. drillers added six rigs to 703 last week, the highest level since April 2015, Baker Hughes Inc. data showed Friday.
- Iran will go along with whatever decision OPEC makes at its meeting later this month on whether to extend oil production cuts beyond June, Oil Minister Bijan Namdar Zanganeh said Saturday.