MELBOURNE (Reuters) – Oil prices rose on Monday, backed by Saudi optimism about demand in Asia and Iraq’s promise to deepen supply cuts, although uncertainty about a deal to boost the US economic recovery has limited profits.
PHOTO: The sun is seen behind the jack of a crude oil pump in the Permian Basin in Lowing County, Texas, USA, November 22, 2019. Reuters / Angus Mordant / File Photo
Crude Brent LCOc1 futures rose 34 cents, or 0.8 percent, to $ 44.74 a barrel at 0641 GMT, while CLC1 futures in West Texas (WTI) rose 47 cents, or 1.1 percent. , to $ 41.69 per barrel.
Both reference contracts fell on Friday due to demand concerns, but Brent still ended the week at 2.5%, with WTI up 2.4%.
“Aramco’s weekend comments are the engine right now,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking.
Aramco of Saudi Arabia (2222.SE) CEO Amin Nasser said on Sunday that he sees demand for oil in Asia to recover as economies gradually reopen as the coronavirus blockade is eased.
“He painted a rosy picture on the prospects for search in the Asian region,” McCarthy said.
On the supply side, Iraq said on Friday it would cut oil production by another 400,000 barrels a day in August and September to offset its overproduction over the past three months. This move would help him cope with his share of redundancies by the Organization of the Petroleum Exporting Countries and their allies called OPEC +.
The sharper cut will lead to an overall reduction in Iraq to 1.25 million bpd this month and next.
“Saudi Arabia and Iraq are building a better relationship on the oil deal, they are excellent for the prospects,” AxiCorp market strategist Stephen Ines said in a note.
Saudi and Iraqi energy ministers said in a joint statement that OPEC +’s efforts would improve the stability of global oil markets, accelerate balancing and send positive signals to markets.
As hopes grow in the lingering talks between the U.S. Democrats and the White House on a new package of support for U.S. states tied to money affected by the coronavirus pandemic, the delay in reaching a market-weighted deal.
US House Speaker Nancy Pelosi and Treasury Secretary Stephen Mnuchin have said they are ready to resume negotiations on an agreement to cover the rest of 2020.
“The longer it gets worse, the worse it is for the demand scenario,” McCarthy said.
He said there is strong technical resistance for WTI around $ 42.50 and between $ 45 and $ 45.50 for Brent.
Holidays in Japan and Singapore on Monday stifled market activity in Asia.
Report by Sonali Paul; edited by Richard Pullin