© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County
By Sonali Paul
MELBOURNE (Reuters) – Oil prices rose Monday, buoyed by Saudi optimism about Asian demand and Iraqi pledge to deepen supply cuts, though uncertainty about a deal to support U.S. economic recovery has limited earnings.
US West Texas crude (WTI) futures rose 50 cents, or 1
Both benchmark contracts fell on Friday, penalized by concerns about demand, but Brent nevertheless ended the week up 2.5%, with WTI up 2.4%.
“Aramco’s weekend comments are the determining factor at the moment,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking.
Saudi Arabia Aramco (SE 🙂 Chief Executive Amin Nasser said on Sunday he sees oil demand picking up in Asia as economies gradually open up after coronavirus lockdowns eased.
“It painted a rosy picture of the demand outlook in the Asian region,” McCarthy said.
On the supply side, Iraq said Friday that it will cut its oil production by an additional 400,000 barrels per day in August and September to offset its overproduction over the past three months. The move would help him meet his quota of cuts by the Organization of Oil Exporting Countries and their allies, collectively called OPEC +.
The sharper cut will bring Iraq’s total reduction to 1.25 million barrels per day this month and next.
“Saudi Arabia and Iraq building better oil deal relationships are excellent for compliance prospects,” AxiCorp market strategist Stephen Innes said in a statement.
Saudi and Iraqi energy ministers said in a joint statement that OPEC + efforts will improve the stability of global oil markets, accelerate its balancing and send positive signals to the markets.
As hopes rose that talks between the U.S. Democrats and the White House over a new support package for cash-strapped U.S. states hit by the coronavirus pandemic grew, delays in reaching a deal weighed on the market.
US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have both said they are willing to restart talks on a deal to cover the rest of 2020.
“The longer it drags on, the worse it is for the demand scenario,” McCarthy said.
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