Oil prices climbed Monday, as traders weigh a report of rising crude output from Saudi Arabia against expected supply disruptions in Iran and Venezuela.
“It remains to be seen if the new production levels [in Saudi Arabia] will just cover the previous loss of output from other countries or if they will create oversupply,” said Fiona Cincotta, senior market analyst at City Index, in emailed commentary.
The initial reaction to the report that the Saudis were raising production was “fairly neutral,” with Brent crude trading modestly higher, she said. In the U.S., WTI saw bigger gains “even though domestic data showed U.S. oil producers have increased the number of active rigs for a third week running.”
After swinging between losses and gains, U.S. benchmark July West Texas Intermediate crude CLN8, +0.50%[1] was up 41 cents, or 0.6%, to $66.15 a barrel on the New York Mercantile Exchange. The commodity logged a weekly loss of 0.1% based on Friday’s close for WTI, marking its third weekly fall in a row, according to FactSet data.
August Brent crude LCOQ8, -0.09%[2] the global benchmark, added 13 cents, or nearly 0.2%, to $76.59 a barrel on the ICE Futures Europe exchange, after a weekly slide of 0.4%.
Late Friday, The Wall Street Journal reported[3] that the most influential member of the Organization of the Petroleum Exporting Countries, Saudi Arabia, had begun to increase its output after two years of leading efforts to curtail global output, with the kingdom boosting production in recent weeks by more than 100,000 barrels a day. That has raised Saudi overall output to about 10 million barrels a day, the report indicated.
Meanwhile, that increase comes after Baker Hughes BHGE, -1.02%[4] on Friday reported that the number of active U.S. rigs drilling for oil inched up by 1 to 862[5]. The rise follows gains in the previous two weeks. The total active U.S. rig count, which includes oil and natural-gas rigs, added 2 to 1,062.
Elsewhere, Russia reportedly increased its crude output to 11.1 million barrels a day in June, above its agreed production cap of 10.95 million barrels a day, according to Interfax.
“This appears a clear sign from Russia that the time has come to ease production cuts,” according to analysts at ING Bank.
Signs of elevated production come ahead of a closely watched meeting of crude-oil producers set for June 22 in Vienna.
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