Oil up as OPEC Plans to Cut Supply Again

Investing.com – Oil bulls have renewed hopes that OPEC will cut supplies before the year is out, which gave crude prices some strength as they head for a third-straight week of losses.

Encouraged by the bargain-hunting that was lifting Wall Street and other battered global equity markets, investors were also buying oil on the dips after a near-$10 drop since the start of October, traders said.

U.S. West Texas Intermediate () crude was up 40 cents, or 0.6%, at $67.22 per barrel by 1:33 PM ET (17:33 GMT). Its U.K. and international peer rose 36 cents, or 0.5%, to $76.53.

Both crude benchmarks rose after OPEC signaled on Thursday it may have to return to oil production cuts as global inventories rise, in a statement that may further sour relations with U.S. President Donald Trump.

The president has repeatedly lashed out at the cartel, saying it is not supplying enough oil. OPEC, plus Russia and other allied non-OPEC producers, agreed to pump more in June.

Earlier on Thursday, Saudi OPEC governor Adeeb Al-Aama told Reuters on that the oil market towards oversupply in this current fourth quarter as inventories rise and demand slows.

Riyadh, being the top exporter of oil, will “mirror” those changes in its output, said Aama, who as Saudi OPEC governor was one of the country’s most senior oil industry officials after Energy Minister Khalid al-Falih.

Aama’s stance appeared to send a different signal to the market after Falih himself had announced earlier this week that Saudi Arabia will pump as much crude as necessary to ensure minimum supply disruption to global supplies from U.S. sanctions on Iranian oil exports beginning Nov. 4.

Until Aama spoke on Thursday, Falih’s remarks had indicated that Saudi Arabia was essentially abandoning its commitment towards OPEC’s production-cutting agreement that helped oil prices recover from the oil glut of the past three years. The Saudi energy minister said earlier this week he was open to adding between 1 and 2 million barrels to daily Saudi production if required. Saudi output now runs at over 10 million barrels per day.

Some analysts and market participants took the OPEC statement and Aama’s remarks as the most logical step for producers amid the evolving supply situation in oil.

“I fear that the market is too complacent” about supply, said Phil Flynn, an analyst at Chicago Price Futures Group, who’s typically bullish on oil.

Other saw it as a sign of the Saudi dilemma: cut production and save oil prices from falling further, or submit to Trump’s demands for higher output and possibly escape U.S. sanctions for the kingdom’s alleged involvement in the murder of journalist Jamal Khashoggi.

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