Oil price rises as Saudi Arabia calls for extended production cuts

Crude oil turned positive yesterday, reversing course on reports that Saudi Arabia has told Opec officials it wants to continue cuts for an additional six months.

Oil futures have been pinned in a range, supported by production cuts from Opec and other states but capped by rising US shale oil production.

The market turned positive after reports that Saudi Arabia told Opec officials it wants to extend production cuts enacted in January for another six months when the group meets in May. Opec members have previously said they lean toward oil cut extensions, so long as non-members are also involved.

Brent crude, the international benchmark for oil, was down 5c from its previous close at $55.93 per barrel. Earlier in the session, Brent had climbed to its highest since March 7 at $56.16. US West Texas Intermediate rose by 11c to $53.19 a barrel.

Brent has risen in each of the previous six sessions, while WTI gained for the last five days. Early in the day, prices had retreated on expectations US inventories could climb again. Analysts said there are worries demand growth could falter, and other indicators were warning that the market had not yet cleared enough of its surplus to keep prices rising.

“There’s a lot of heightened geopolitical tension on two fronts,” said Phil Streible, senior market strategist at RJO futures in Chicago. Rising concerns about North Korea and Syria may depress oil demand, he said.

US crude inventories have touched record highs at the US storage hub of Cushing, Oklahoma and in the US Gulf Coast in recent weeks, according to government data.

A Reuters poll of analysts forecast a rise in US crude inventories for a fourth straight week.

• Reuters