Brent crude oil prices hold as Saudi Arabia signals supply cuts will continue
Oil prices remained flat on Monday after finding support from Saudi Arabia, with the country signalling that OPEC+ would continue to tighten supply.
Saudi Arabia bolstered the oil market on Monday after it and the Organisation of the Petroleum Exporting Countries (OPEC) and its allies take necessary steps to avoid a surplus of crude supplies.
‘We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,’ Saudi Arabian Energy Minister Khalid al-Falih told Saudi-owned Arab News newspaper in an interview.
Brent crude futures make gains after suffering May losses
Front-month Brent crude futures rallied 1% to $62 a barrel on Monday morning following the news that OPEC+ pledged to prolong oil supply cuts.
The slight rally in oil price comes after the market suffered major six-month lows in May, with Brent crude sliding 3% on Friday last week.
Meanwhile, US West Texas Intermediate (WTI) crude futures climbed 32 cents, hitting $53.82 a barrel on Monday.
‘There’s no doubt that Saudi Arabia has shown a lot of frustration with the price of oil,’ Price Futures Group (Chicago) analyst Phil Flynn told Reuters.
‘They’re scratching their heads, saying, ‘Hey, we think the market has it wrong and to prove that’s the case, we’re going to keep cutting production until the market gets it right.’’
Investors fear US-China trade war will hurt demand for oil
Oil prices have had to contend with a myriad of headwinds, with investors most concerned that the ongoing US-China trade war and Donald Trump’s threat to impose tariffs on Mexico could see global oil demand evaporate.
‘Focus has shifted from the supply to the demand side as a U.S.-China trade agreement has proven elusive and as worries over the debilitating effects of tariffs on global economic growth have now shifted to Mexico,’ Jim Ritterbusch of Ritterbusch and Associates said in a note to investors.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets