WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange continued higher in early trade Tuesday on expectations a fourth consecutive weekly draw from U.S. commercial crude oil inventories took place last week, while Saudi Arabia's new energy minister pledged commitment to ongoing supply cuts to further feed the bullish sentiment.
Shortly after 9 a.m. EDT, NYMEX October West Texas Intermediate futures were up $0.80 at $58.65 barrel (bbl), with ICE November Brent moving higher in tandem with the U.S. benchmark, trading at $63.40 bbl. NYMEX October ULSD futures were up $2.4 cents near $1.9515 gallon, with the October RBOB contract gaining 2.45 cents to near $1.6095 gallon.
Crude oil and product futures extended gains early Tuesday ahead of a weekly rundown of supply statistics for the first week of September. Market participants expect U.S. commercial crude oil inventories fell 3.6 million bbl last week to 419.4 million bbl, while gasoline stocks are seen to have declined 1.4 million bbl and distillate stocks to have risen 220,000 bbl in the week reviewed. The American Petroleum Institute will release its supply report at 4:30 p.m. EDT and official government figures from the U.S. Energy Information Administration to be published 10:30 a.m. EDT Wednesday.
WTI and Brent rallied to six-week high settlements Monday, spurred by news Saudi Arabia replaced its energy minister with Prince Abdulaziz bin Salman, who is known in the industry for decades of work on fostering relations within Organization of the Petroleum Exporting Countries (OPEC). The newly appointed minister wasted no time in reassuring markets of Saudi Arabia's commitment to pledged cuts, while also calling on OPEC members to continue with the quotas under their multilateral supply accord.
At first glance, the reshuffle within the all-powerful energy ministry suggests the continuation of previous policy, but analysts note the Saudis might push for deeper cuts among OPEC members in the coming months. The bottom line is Saudi Arabia failed to lift oil prices to satisfy the kingdom's budget needs this year despite consistently over delivering on pledged production cuts.
Saudi Arabia restricted crude production to 9.63 million barrels per day (bpd) last month, well below its quota of 10.311 bpd, while holding seaborne exports at an average 7 million bpd since February, according to multiple market intelligence reports. Meanwhile, several OPEC members reportedly missed their targets in August and instead raised their production to take advantage of the created void on the global market. Iraq boosted crude exports from both South and North ports last month and targeted traditional export markets for Iranian barrels, including China and India. Nigeria has been pumping at record high levels at its offshore oil field of Egina, according to International Energy Agency.
The change at the top within Saudi energy ministry took place just days before OPEC+'s Joint Ministerial Monitoring Committee gathering on Thursday. To push crude oil higher, the committee would have to reaffirm its cap on production, and possibly signal deeper cuts to counter decelerating demand due to global trade tensions.
Markets mostly expect further downward revisions to be made to global oil demand forecasts this week with the release of monthly outlooks. U.S. Energy Information Administration will release its Short-Term Energy Outlook at 12:00 p.m. EDT, which will be followed by OPEC's Monthly Oil Market Report on Wednesday. Paris-based International Energy Agency will publish its monthly projections for the global oil market Thursday morning.
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