Oil prices extended gains on Tuesday after Saudi Arabia pledged to curb exports from next month and OPEC called on several members to boost compliance with production cuts to help rein in global oversupply and tackle flagging prices. Gains were also supported by a warning from Halliburton’s executive chairman that the growth in North American rig count was “showing signs of plateauing,” clouding a boom in US shale oil production. London Brent crude for September delivery was up 30 cents, or 0.6 percent, at $48.90 a barrel by 0206 GMT after settling up 1.1 percent on Monday. US West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.7 percent, at $46.65. In a ministerial meeting in St. Petersburg on Monday, Saudi Energy Minister Khalid al-Falih said the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC partners were committed to extending their existing deal to cut output by 1.8 million barrels per day (bpd) beyond March 2018 if necessary. The Saudi minister added that his country would limit crude oil exports at 6.6 million barrels per day in August, almost 1 million bpd below levels a year ago. OPEC also agreed that Nigeria would join the deal by capping or even cutting its output from 1.8 million bpd, once it stabilises at that level from 1.7 million bpd recently. Nigeria had been exempt from the output cuts. Russian Energy Minister Alexander Novak said that an additional 200,000 barrels per day of oil could be removed from the market if compliance with a global deal to cut output was 100 percent. The compliance was 98 percent in June, the group said.
“In our view … these meetings were aimed at saving face and diverting the market’s attention away from Iraq’s poor compliance, shale’s resilience, and Libya’s and Nigeria’s markedly higher output,” Britain’s Barclays bank said.
US commercial crude oil inventories likely fell by 3 million barrels last week, a preliminary Reuters poll showed on Monday ahead of the data by the Industry group the American Petroleum Institute later in the day. Industry group the American Petroleum Institute is due to release its weekly oil data at 4:30 pm.