Home Middle East Oil steady after hitting three-week top; Saudis to keep output below cap

Oil steady after hitting three-week top; Saudis to keep output below cap

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Oil steadied around its highest prices in three weeks on Monday, supported by comments from Saudi Arabia that it would continue to curb shipments in line with the OPEC-led effort to cut global supplies.

Brent crude was last down 8 cents on the day at $67.23 a barrel at 1005 GMT, after having risen almost 4 percent last week in its largest weekly gain since late October.

U.S. West Texas Intermediate crude for April delivery eased 5 cents to $63.50 a barrel after rising 3 percent last week. Both contracts earlier rose to their highest since Feb. 7.

A cold snap across Europe has encouraged some refiners to delay maintenance, which could support demand and help to put an end to a mild bout of profit-taking, analysts said.

“There is a bit of a bearish twinge to everything … but we believe in the second half (of the year), you’ll see demand pull the market back up again,” Natixis oil analyst Joel Hancock said.

“Our view is demand will be strong enough, but we don’t see a big breakout. $60 to 70 is the range we’re seeing for this year.”

Prices did draw some support from Saudi Arabian oil minister Khalid al-Falih, who on Saturday said the country’s crude production in January-March would be well below output caps, with exports averaging less than 7 million barrels per day.

Saudi Arabia hopes OPEC and its allies will be able to relax production curbs next year and create a permanent framework to stabilize oil markets after the current agreement on supply cuts ends this year, Falih said.

“A study is taking place and once we know exactly what balancing the market will entail, we will announce what is the next step. The next step may be easing of the production constraints,” he told reporters in New Delhi.

“My estimation is that it will happen sometime in 2019. But we don’t know when and we don’t know how”.

U.S. energy companies last week added one oil rig, the fifth weekly increase in a row, bringing the total count up to 799, the highest since April 2015, Baker Hughes energy services firm said on Friday.

Hedge funds and money managers upped their bullish wagers on U.S. crude oil for the first time in four weeks, data showed on Friday.

A powerful 7.5-magnitude earthquake struck Papua New Guinea’s Southern Highlands province early on Monday, the U.S. Geological Survey (USGS) said, prompting oil and gas companies to immediately suspend operations in the energy-rich interior.

Meanwhile, Libya’s National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield after a protest by guards closed the field.

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