Oil Prices Gain on Saudi Plan to Cut Output

Investing.com – Oil prices moved higher on Monday following reports that Saudi Arabia announced plans to cut oil output from December and suggested that other members of OPEC and their non-OPEC allies led by Russia could follow suit.

New York-traded gained 75 cents, or 1.25%, at $60.94 a barrel by 10:08 AM ET (15:08 GMT).

Meanwhile, , the benchmark for oil prices outside the U.S., rose 91 cents, or 1.30%, to $71.09.

Saudi energy minister Khalid al-Falih said on Sunday the kingdom would (bpd) in December due to lower seasonal demand. The cut represents a reduction in global oil supply of about 0.5%, according to reports.

Al-Falih also suggested that there might be a need for OPEC and non-OPEC members to trim supply back by 1 million bpd from October levels.

Global oil prices are still down by around 20% since early October, hit by signs of growing output from key producers, mainly the U.S., Saudi Arabia and Russia, and indications of a global economic slowdown.

U.S. drilling activity has been steadily increasing as Baker Hughes data released last Friday showed that oil-directed rigs increased 12 units from last week to , at their highest level since March 2015 and up from the 738 rigs drilling for oil a year ago.

Just last month oil prices hit nearly four-year highs as the market braced for potential shortages ahead of the restoration of sanctions against Iran, the third-largest producer OPEC on Nov. 4.

The sanctions, however, are unlikely to cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran’s biggest buyers, which will allow them to continue buying limited amounts of crude for at least another six months.

In other energy trading, advanced 1.86% to $1.6515 a gallon by 10:10 AM ET (15:10 GMT), while rose 0.19% to $2.1770 a gallon.

Lastly, traded up 1.77% to $3.785 per million British thermal units.

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