Oil prices edged up yesterday, supported by ongoing supply cuts from producer club OPEC and Russia and by a drop in U.S. drilling activity.
International Brent crude oil futures were at $60.75 per barrel, up 27 cents, or 0.5 per cent, from their last close, while the U.S. West Texas Intermediate (WTI) crude futures were up 22 cents, or 0.4 per cent, at $51.81 a barrel.
Economic research firm TS Lombard said oil “prices are likely to stabilise around current levels and quite possibly drift upwards”, pointing to supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, as a fundamental driver.
Drillers cut four oil rigs in the week to January 11, bringing the total count down to 873 , energy services firm Baker Hughes said in a weekly report on Friday.
However, TS Lombard said oil prices may not rise much higher as “the world economy is now slowing… limiting the scope for positive surprises in oil demand and hampering inventory reduction
Meanwhile, Saudi Arabia’s energy minister said Sunday that major oil producers need to do better to narrow swings in prices that dip below $60 a barrel and rise above $86.
“I think what we need to do is narrow the range of volatility,” Khalid al-Falih said.
“We need to do better and the more producers that work with us, the better we’re able” to do so, he told the Atlantic Council’s Global Energy Forum in Abu Dhabi.
Cautious not to set a price target or range, he explained there are consequences when oil prices dip too low or rise too high.
Last month, OPEC countries, including Saudi Arabia, and other major oil producers agreed to cut production by 1.2 million barrels a day to reduce oversupply and boost prices for the first six months of 2019.
Oil producers are under pressure to reduce production following a sharp fall in oil prices in recent months because major producers – including the United States – are pumping oil at high rates.
Brent crude, the international standard, traded at $60.48 a barrel in London on Friday. Benchmark U.S. crude stood at $51.59 a barrel in New York.
Analysts say the kingdom needs oil between $75 and $80 a barrel to balance its budget, with spending for this year to reach a record high of $295 billion.
