Oil prices climb amid expected OPEC cut, but markets remain wary

Tuesday, 20 November 2018 00:00 - - {{hitsCtrl.values.hits}}

A rainbow is seen over a pumpjack during sunset outside Scheibenhard, near Strasbourg, France - REUTERS

SINGAPORE (Reuters): Oil prices rose around 1% on Monday as traders expected top exporter Saudi Arabia to push producer club OPEC to cut supply towards year-end.

Despite that, market sentiment remains weak on signs of a demand slowdown amid deep trade disputes between the world’s two biggest economies, the United States and China.

Front-month Brent crude oil futures were at $67.29 per barrel at 0259 GMT, up 53 cents, or 0.8%, from their last close.

US West Texas Intermediate (WTI) crude futures, were up 71 cents, or 1.3%, at $57.17 per barrel.

“The market’s bullish radar is still waiting for OPEC+ to deliver a sizeable cut number,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, is pushing for the producer cartel and its allies to cut one million to 1.4 million barrels per day (bpd) of supply to adjust for a slowdown in demand growth and prevent oversupply.

Despite Monday’s gains, crude prices remain almost a quarter below their recent peaks in early October, weighed down by surging supply and a slowdown in demand growth.

This comes in part after Washington granted Iran’s major oil customers, mostly in Asia, unexpectedly broad exemptions to sanctions it re-imposed on Tehran in November.

Japanese refiner Fuji Oil is set to resume Iranian crude purchases after Japan received one of those waivers, industry sources familiar with the matter said.

Japan had ceased all purchases of Iranian oil prior to receiving the waiver in early November.