Oil Rallies On Saudi Comments, Weak Dollar
NEW YORK, Feb 14 (Reuters) - Oil prices rallied on Wednesday, shaking off earlier weakness as U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major oil producers would prefer tighter markets than end supply cuts too early.
Markets also benefited from more weakness in the dollar, which dropped 0.7 percent after stronger-than-expected U.S. consumer inflation figures. Oil tends to move inversely to the dollar, and has also of late been trading in tandem with stocks, which finished the day up more than 1 percent.
"The demand fundamentals in today’s report were really strong," said Richard Hastings, macro strategist at Seaport Global Securities in Charlotte, North Carolina. "At the same time, you’ve got a little bit of a weaker dollar day on inflation and that could be that some of the price reaction here."
Brent crude futures settled up $1.64 a barrel, or 2.6 percent, to $64.36 a barrel. U.S. West Texas Intermediate crude futures gained $1.41, or 2.4 percent, to $60.60 a barrel.
U.S. crude inventories rose 1.8 million barrels last week, Energy Information Administration (EIA) data showed compared with expectations for an increase of 2.8 million barrels.
The market rallied after Al Falih said the Organization of the Petroleum Exporting Countries said he would rather leave the oil market slightly short of supplies than lift output cuts too early.
OPEC and its partners, including Russia, have curbed supply since January 2017 to drain global stocks in an agreement that continues through the end of the year.
There has been concern about that deal's efficacy due to the sharper-than-expected increase in U.S. production, and that OPEC and Russia may look to exit the deal to preserve market share. Al Falih's comments suggest that is not in the offing.
"The comments from Al Falih are by far most significant thing, big-picture," said Michael Wittner, managing director and global head of oil research at Societe Generale. "These statements are saying pretty strongly that they really don't want to go below $60 Brent."
U.S. production rose to 10.27 million bpd last week, the EIA said, which, if confirmed by monthly data, would represent an all-time U.S. record. The International Energy Agency on Tuesday said the rapid increase in supply, particularly in the United States, could overtake consumption.
Physical markets are reflecting this concern. Prices for crude from the North Sea, Russia, the United States and Middle East have dropped to multi-month lows.
(Additional reporting by Ayenat Mersie and Scott DiSavino in New York, Amanda Cooper in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Lisa Shumaker)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension