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.
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