Oil rose as Saudi Arabia pledged deep cuts to its crude exports, while Halliburton Co. said the shale boom is slowing down.
Futures rose as much as 1.6% in New York. Saudi Arabia, OPEC’s largest producer, will limit exports to 6.6 million barrels a day in August, 1 million lower than a year earlier, Energy Minister Khalid Al-Falih said. Meanwhile, Halliburton, the world’s top
Meanwhile, Halliburton, the world’s top fracking-services provider, said U.S. explorers are "tapping the brakes" as oil struggles to breach $50 a barrel.
"He came out and threw that out there at a pretty opportune time," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said of Al-Falih’s pledge.
Oil remains in a bear market amid concern that rising global output will offset the production curbs by members of the Organization of Petroleum Exporting Countries and its allies, including Russia. The group is likely to become less compliant with its cuts toward the end of this year, with the risk of a domino effect after some members suggested they won’t adhere to their targets, according to JPMorgan Chase & Co.
U.S. shale explorers have helped keep inventories high, but the drilling surge may be plateauing, said Halliburton Executive Chairman Dave Lesar. Drillers are now "making rational decisions" as prices remain low, he said.
West Texas Intermediate for September delivery rose 55 cent to $46.32 a barrel at 12:15 p.m. on the New York Mercantile Exchange. Total volume traded was about 6 % below the 100-day average.
Brent for September settlement was 54 cents higher at $48.60 a barrel on the London-based ICE Futures Europe exchange. Prices lost 1.7% last week. The global benchmark crude traded at a premium of $2.25 to WTI.
The deal that OPEC and its allies have implemented since Jan. 1 focused on production cuts rather than export cuts. On July 24 in St. Petersburg, OPEC Secretary-General Mohammad Barkindo said OPEC was in agreement to study “ other parameters.”
“From the market’s point of view, the only thing they care about is exports,” said Amrita Sen, chief oil analyst at Energy Aspects. The focus on exports will be “positive” for the oil market balances, she said.
Libya is allowed to keep increasing production and has plans to raise output as high as 1.25 million barrels a day, Al-Falih said in St. Petersburg on July 24. Nigeria is ready to cap or even reduce its supply if it can maintain output of 1.8 million barrels a day, according to people familiar with the matter. Both countries are exempt from OPEC’s cuts agreement due to internal strife that hindered the recovery of their crude production.
OPEC may need to discuss in November extending the oil output cuts, United Arab Emirates energy minister Suhail Al Mazrouei said. Market rebalancing is on track and is set to accelerate in the second half of the year, OPEC’s Barkindo said. U.S. drillers trimmed the rig count last week by 1 to 764, the first drop in three weeks, according to Baker Hughes data Friday. Nigeria signaled earlier this month that it would cap production when it can maintain stable production of 1.8 million barrels a day.
By Meenal Vamburkar