Crude rallied to the highest in more than a week as traders remained optimistic over Saudi Arabia’s planned production cuts and amid a weaker dollar.
Futures climbed as much as 1.3% in New York to the highest since March 1. Saudi Arabia’s commitment to OPEC’s deal to reduce output supported prices, with the producer said to be planning to supply customers with less oil than requested in April. Meanwhile, a weaker dollar bolstered the appeal of commodities traded in the U.S. currency, such as oil.
“The Saudis are not going to relent on cutting production. They’re on a mission to get prices back up to $80 a barrel,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. A weaker dollar is also supporting crude oil, he said.
Oil has rallied more than 25% so far this year in New York as the Organization of Petroleum Exporting Countries and its allies show commitment to their deal to reduce production and as output in Venezuela declines. Gains have been limited though as U.S. crude production remains at record-high levels.
Meanwhile, traders are watching for headlines from CERAWeek by IHS Markit, the annual gathering in Houston of some of the energy industry’s biggest names. OPEC Secretary-General Mohammad Barkindo said “we are not worried about shale. What we are concerned about is orderly growth, orderly expansion, to meet current and future demand.”
West Texas Intermediate for April delivery climbed 47 cents to $57.26/bbl at 12:01 p.m. on the New York Mercantile Exchange.
Brent for May settlement added 27 cents to $66.85/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.29 premium to WTI for the same month.
The Bloomberg Dollar Spot Index declined for a third straight day, falling as much as 0.2%.
Saudi Arabia’s production cut means the country will ship less than 7 MMbpd in April, significantly less than the 7.6 MMbpd its customers requested, the Saudi official said.
In the U.S., crude stockpiles probably gained 3.05 MMbbl last week, according to a Bloomberg survey ahead of an Energy Information Administration report on Wednesday. The American Petroleum Institute is scheduled to release its weekly count of stockpiles later Tuesday.