Investing.com -- Crude oil prices bounced sharply on Monday after a report suggesting that Saudi Arabia will push for deeper output cuts when it meets with OPEC and non-OPEC allies later this week.
However, they trimmed gains after Commerce Secretary Wilbur Ross renewed the threat of higher tariffs on Chinese imports. The next tariff increase is scheduled to take effect on Dec. 15.
“If nothing happens between now and then, the president has made quite clear he’ll put the tariffs in – the increased tariffs," Ross told Fox Business.
By 10:40 AM ET (15:40 GMT). U.S. crude futures were up 1.4% from late Friday at $55.95 a barrel, while the global benchmark Brent was up 1.0% at $61.10 a barrel. Both had been up more than 2% earlier in the day.
Over the weekend, Reuters’ sources said that Saudi Arabia will try to remove another 400,000 barrels a day of output withheld from the market in addition to the 1.2 million bpd that the OPEC+ group is currently withholding. They added that Saudi Arabia also wants to extend production cuts through June.
OPEC’s ministers will meet in Vienna on Thursday and the wider OPEC+ group will gather on Friday. Delegates will arrive in Vienna for the talks over the next few days. A consensus typically emerges during a flurry of bilateral exchanges in the days leading up to the formal meetings, meaning the market will be susceptible to swings.
Iraqi oil minister Thamir al-Ghadhban also told reporters in Baghdad on Sunday that a proposal to increase the cuts to 1.6 million bpd could be considered.
Another variable up for discussion will be how long to extend any output restraint. Current forecasts point to oversupply in the first half of the year in particular, before demand catches up in the second half.
Non-OPEC supply continues to expand. Data released earlier showed Brazilian output rose 1.2% in October to an average of 2.964 million barrels a day, while more backward-looking U.S. government data released on Friday showed U.S. output was still growing in September despite an increasing squeeze from falling prices on marginal production in the shale patch.
Crude output increased by 66,000 bpd to a record 12.46 million bpd, according to the Energy Information Administration. Production has risen by more than 950,000 bpd since the same point last year, and weekly EIA data indicate it continued to rise in October and November, albeit at a slower pace.