Oil Extends Gain Before OPEC Meeting

Oil Extends Gain Before OPEC Meeting
Oil extended gains into a fourth day as OPEC and its allies prepare to meet later this week.

(Bloomberg) -- Oil extended gains into a fourth day as OPEC and its allies prepare to meet later this week to discuss compliance with output cuts amid speculation that Saudi Arabia is likely to stick to its policy of controlling supply under its new energy minister.

Futures added 1.2% after climbing 2.6% last week. A two-day meeting of the OPEC+ Joint Technical Committee starts Wednesday with the United Arab Emirates energy minister saying there’ll be a push to get all members committed to curbs though there’s no recommendation to make deeper cuts. Saudi King Salman dismissed Khalid Al-Falih as the country’s energy minister and replaced him with one of his sons, Prince Abdulaziz bin Salman.

Oil capped a second weekly gain on Friday as shrinking U.S. crude stockpiles and remarks from Federal Reserve Chairman Jerome Powell seeking to calm fears of a possible recession bolstered the demand outlook. A Russian official said his country intends to maintain its critical alliance with Saudi Arabia even after the removal of Al-Falih.

“The general feeling is that the outgoing minister, Khalid Al-Falih, had not delivered” on oil prices since 2016, Jeffrey Halley, a senior market analyst at Oanda Corp., said in a note. Speculation that the incoming minister could accelerate a tightening of supplies may boost crude futures, he said.

West Texas Intermediate oil for October delivery added 68 cents to $57.20 a barrel on the New York Mercantile Exchange as of 8:04 a.m. in London. The contract climbed 22 cents to $56.52 on Friday.

Brent for November rose 65 cents, or 1.1%, to $62.19 a barrel on the ICE Futures Europe Exchange. The contract capped a fourth weekly gain on Friday. The global benchmark traded at a $5.10 premium to WTI for the same month.

Prince Abdulaziz served as deputy petroleum minister for a dozen years and most recently as minister of state for energy since 2017. The new minister takes charge as the Organization of Petroleum Exporting Countries and its allies, most notably Russia, are trying to bolster prices at a time when a raging trade war between the U.S. and China weighs on global demand

The change of ministers doesn’t mean a change in strategy, U.A.E. Energy Minister Suhail Al Mazrouei said in a Bloomberg TV interview on Sunday in Abu Dhabi. Prince Abdulaziz will continue Al-Falih’s “good work” and has knowledge of the industry, Mazrouei said.

To contact the reporter on this story:
Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editors responsible for this story:
Serene Cheong at scheong20@bloomberg.net
Ben Sharples


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