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Global oil prices surged again Monday, taking U.S. crude past $60 a barrel, as both Saudi Arabia and Russia said they would support an OPEC agreement that would extend the cartel's production cuts well into the second half of the year.

The world's second and third largest producers, behind the United States, reached an agreement on the cuts, which are taking 1.2 million barrels from the market each day, on the sidelines of the G20 summit in Osaka, Saudi Energy Minister Kalid al-Falih wrote on his official Twitter account Sunday. The pair were joined in support by both Iran and Iraq on Monday as OPEC leaders gathered in Vienna for two-days of talks that are now expected to result in at least a nine-month extension of the output pact that was first agreed in December of 2018.

"Oil prices should enjoy some immediate relief given expectations of the OPEC+ production cuts extension, along with the positive sentiment accompanying the revival of US-China trade talks," said FXTM market analyst Han Tan. "While an official extension should strengthen the floor under Oil prices, the lingering concerns over slowing global demand growth may cap Oil's upside, unless existing US-China tariffs are lifted to brighten the global economic outlook."

"Markets will also be assessing whether OPEC+ efforts to rebalance the global Oil markets may be enough, in light of record US crude output, along with the risk of another flare-up in the US-China trade conflict which could drag global growth lower," he added.

Brent crude contracts for August delivery, the global benchmark, were seen $1.82 higher from their Friday close in New York and changing hands at $66.56 per barrel in early European trading. WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked $1.65 higher at $60.12 per barrel, the highest since May 22.

London-listed oil majors BP plc (BP) and Royal Dutch Shell (RDS.A) led a notable gains for basic resource stocks in early European trading, rising 1.6% and 1.3% respectively, as investors also extended bets on near-term crude gains following a breakthrough in the stalled U.S.-China trade talks.

However, with China's industrial economy running at the weakest pace in seventeen years, and U.S. drilling pumping a record 13 million barrel each day, the downdraft for global oil markets looks powerful.

The International Energy Agency cut its 2019 demand growth forecast Friday to 1.2 million barrels per day, noting that "the main focus is on oil demand as economic sentiment weakens", and adding that a "worsening trade outlook" was a common theme around the regions it covered in its monthly outlook report.

Those views were echoed by the U.S. Energy Information Administration, which said Wednesday that U.S. supplies rose by 2.21 million barrels in the week ending June 7 to take the overall supply tally to 485.47 million barrels, the highest in nearly two years.

The EIA also trimmed its forecast for world demand yesterday to around 1.22 million barrels per day in its regular Short-Term Energy Outlook report, a 160,000 reduction from its prior forecast. It also lowered its growth estimate for 2020 by 110,000 to 1.42 million barrels per day.