Oil adds to rally on optimism over declining stocks
SINGAPORE, July 26 ― Oil prices firmed yesterday to hold near eight-week highs hit in the previous session, on expectations of a drawdown in US stocks and as a rise in shale oil production shows signs of slowing.
Brent crude futures rose 32 cents, or 0.6 percent, to US$50.52 (RM216.52) a barrel by 0142 GMT, after rallying more than 3 percent yesterday.
US West Texas Intermediate futures rose 42 cents, or 0.9 percent to US$48.31 a barrel.
US crude stocks fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, data from industry group the American Petroleum Institute showed yesterday.
Crude inventories fell by 10.2 million barrels in the week ending July 21 to 487 million, compared with expectations for a decrease of 2.6 million barrels.
The market has been buoyed by Saudi Arabia’s announcement at a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers on Monday that it will limit crude exports to 6.6 million barrels per day (bpd) in August, down nearly 1 million bpd from a year earlier.
Nigeria also agreed to join the deal by capping or cutting its output from 1.8 million bpd once it stabilises at that level.
“This has seen expectations of further drawdown in inventories increase,” ANZ said in a research note, referring to the Saudi plans.
There was also optimism over US shale gas output amid industry comments that North America’s rig count may be plateauing.
On Monday, Anadarko Petroleum Corp said it would cut its 2017 capital budget by US$300 million because of depressed oil prices, the first major US oil producer to do so, after posting a larger-than-expected quarterly loss.
Oil prices have come under pressure from an oversupply of crude around the globe, brought on in part by rising production from US shale regions.
Indonesia’s energy minister said yesterday that Southeast Asia’s top crude producer would be open to rejoining the Organization of the Petroleum Exporting Countries (OPEC) as long as it is not forced to curb its own crude oil production. ― Reuters