Oil prices rose Monday as Saudi Arabia announced it would further curtail oil exports, but U.S. crude futures remained below $50 a barrel as investors awaited fresh data this week.
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U.S. crude futures rose 29 cents, or 0.59%, to $49.58 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 17 cents, or 0.31%, to $55.79 a barrel on ICE Futures Europe.
Saudi Arabia said Monday that its state oil company was undertaking an "unprecedented" effort to cut petroleum exports, as the kingdom tries to bolster oil prices by withholding supply. The move is part of Saudi Arabia's efforts to boost confidence in production cuts totaling almost 2% of the global oil market by the cartel, the Organization of the Petroleum Exporting Countries, and allies like Russia.
Saudi Arabian Oil Co., known as Aramco, is slashing over 7% of the crude it exports by sea in November compared with last year, the kingdom's oil ministry said. The move underlined Saudi Arabia's new emphasis not only on cutting its oil production but also the amount that it exports into the global market.
The export allocation of 7.15 million barrels a day in November remains higher than the 6.7 million barrels a day of exports that Saudi Arabia sent into global crude markets in September. Saudi officials said the month-to-month figure went up because customers are demanding more oil in November.
OPEC Secretary-General Mohammed Barkindo said in a speech Monday that there is "clear evidence" that the oil market is coming into balance and that the group remains committed to its goal of reducing global stockpiles.
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"We will not waiver; we will not tire," he said.
Prices stabilized Monday after falling more than 2% on Friday amid concerns that Hurricane Nate would curb demand from refiners.
But Monday's price increase was relatively muted, analysts said. U.S Investors remained in a wait-and-see mode ahead of the release of oil market data from OPEC on Wednesday and the International Energy Agency on Thursday.
"The fact that we did not get any significant strength from the Saudi news is rather disheartening for the bulls," said Stephen Schork, an analyst and author of the Schork Report. "The market is very skeptical of this."
Some analysts suggested that U.S. exports would help fill the void left by Saudi Arabia. Shipments from the U.S. have surged to new records, nearing 2 million barrels a day, in the aftermath of Hurricane Harvey. Analysts at Capital Economics said refiners are merely replacing shipments from elsewhere in favor of cheaper U.S. crude.
"This would leave the same amount of oil in the market since some consumers will be importing less from elsewhere," they wrote Monday. "What's more, higher U.S. exports are likely to encourage U.S. shale producers to further increase production which will delay market rebalancing."
Saudi Arabia wants oil prices to rise to $60 a barrel in hopes of making a success of the initial public offering of Aramco planned for next year, and some investors have said that enough is reason to bet on higher oil prices.
Bill O'Grady, chief market strategist at Confluence Investment Management, said U.S. crude futures could climb as high as $60 a barrel.
"Dollar weakness coupled with OPEC trying to continue tightening supplies should be supportive. You want to be bullish until the Saudis price that IPO," he said.
Gasoline futures rose 0.06 cent, or 0.04%, to $1.5594 a gallon. Diesel futures fell 0.87 cent, or 0.5%, to $1.7352 a gallon.
--Neanda Salvaterra contributed to this article.
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(END) Dow Jones Newswires
October 09, 2017 16:07 ET (20:07 GMT)