Investing.com – The crude rally is still alive, but keeping it going could be a struggle with the Saudis already prepping oil bulls not to get their hopes up too much ahead of Thursday’s OPEC meeting.
U.S. settled up 30 cents, or 0.6%, at $53.25 per barrel. The session high was $54.55, a little shy of the $55 peak predicted by various traders ahead of the OPEC meeting. On Monday, WTI jumped more than $2, or 4%, for its largest one-day gain since June.
was up 26 cents, or 0.4%, at $61.95 by 3:05 PM ET (20:05 GMT), after a session peak at $63.58. Like WTI, Brent also rose 4% on Monday. Traders expects the U.K. crude benchmark to reach as high as $65 before the OPEC meeting.
Crude markets struggled after Saudi Arabia’s Energy Minister Khalid al-Falih said in an interview with Bloomberg that it was “premature” to “figure out what needs to be done and by how much” on oil production cuts ahead of OPEC meeting beginning Dec. 6.
President Donald Trump’s led to a selloff on Wall Street and also weighed on sentiment in oil as the president raised the possibility of fresh trouble in trade relations with Beijing, just after the 90-day ceasefire on duties announced by the White House.
For crude traders, the remarks by Saudi Energy Minister Falih were particularly worrying as they gave a different signal to the direction the OPEC meeting could be taking after the G20 meeting between Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin, which gave the assurance of “continued cooperation in oil market rebalancing”.
“It looks to me like the selling pressure that’s been the driving force of oil over the past eight weeks could just return, unless OPEC conducts and communicates itself in a better way in the next two days before it meets,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Conn.
Part of Tuesday’s market strength could be due to expectations that weekly U.S. crude supply-demand data due on Thursday show an decline of 2.2 million barrels, the first such drop in 11 weeks.
Energy Aspects, in a note issued to its clients on Monday, said the most difficult thing for OPEC could be finding the right language to phrase its production cut, if indeed there would be one.
“Communicating it properly to this fragile market will be imperative—a jumbled statement referring to some broad intention to prevent the market from being oversupplied will undoubtedly trigger a further sell-off in prices,” the London-based research outfit said.
The note added that despite widespread expectations that OPEC will announce a cut of 1.3 million barrels or more “the market must be ready for a no-deal scenario, at least in the way the market wants it communicated. Stealth cuts look most likely right now, which means it will take a few months for oil prices to climb back up again.”
Falih, speaking to Bloomberg on the sidelines of the United Nations climate talks in Katowice, Poland, said OPEC needed to “get together and listen to our colleagues, hear about their views on supply and demand and their projections of their own countries’ production.”
“The next road to cross is whether all countries are willing to come on board and contribute to that cut,” he added.