Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices rally more than $1 on bullish Saudi comments

Published 01/17/2017, 09:41 AM
Updated 01/17/2017, 09:41 AM
© Reuters.  Oil prices rally more than $1

© Reuters. Oil prices rally more than $1

Investing.com - Oil prices were sharply higher on Tuesday, as upbeat comments from Saudi Arabia's oil minister added to optimism that major oil producers are sticking to their pledge to cut back output as part of a deal to curb global oversupply.

Crude oil for February delivery on the New York Mercantile Exchange jumped $1.04, or around 2%, to $53.41 a barrel by 9:40AM ET (14:40GMT). Markets in the U.S. were closed Monday for a public holiday.

Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London rose 97 cents, or about 1.8%, to $56.83 a barrel, after gaining 41 cents, or 0.74%, on Monday.

Saudi Arabian Energy Minister Khalid al-Falih said on Monday that the kingdom will adhere strictly to its commitment to cut output under a global agreement, expressing confidence that OPEC's plan to prop up prices would work.

Speaking to reporters on the sidelines of an industry event in Abu Dhabi, Falih added that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, citing the level of compliance with the deal and the rebalancing of the market.

Meanwhile, OPEC Secretary-General Mohammed Barkindo forecast on Monday that stability would return to oil markets this year while price hawk Venezuela said it hoped its crude basket would rise to $70 in coming months.

January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day for the next six months.

The deal, if carried out as planned, should reduce global supply by about 2%.

However, some traders remain skeptical that the planned cuts will be as substantial as the market currently expects.

While some major oil producers, such as Saudi Arabia and Kuwait, have so far showed signs that they are sticking to their pledge to cut back output, others, such as Libya have ramped up production.

OPEC plans to release its monthly oil report on Wednesday, while the International Energy Agency’s monthly report is due the day after, as traders look for further evidence that oil producers are adhering to planned output cuts.

Elsewhere on Nymex, gasoline futures for February ticked up 2.9 cents, or 1.8% to $1.651 a gallon, while February heating oil added 3.8 cents, or 2.3%, to $1.689 a gallon.

Natural gas futures for February delivery shed 3.6 cents, or about 1%, to $3.381 per million British thermal units.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.