SINGAPORE – Oil prices rose on Monday after Saudi Arabia said producer club OPEC and Russia were likely to keep withholding supplies, and in relief as the United States withdrew its threat to impose import tariffs on Mexico, removing one cloud over the global economy.
Front-month Brent crude futures, the international benchmark for oil prices, were at $63.52 at 0310 GMT, 23 cents, or 0.4%, above Friday’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $54.29 per barrel, 30 cents, or 0.6%, above their last settlement.
Traders said crude prices were rising because of statements by OPEC’s de-facto leader Saudi Arabia on Friday saying that the group was close to agreeing extended supply cuts.
“Brent futures continue rising … after the Saudi Arabian Energy Minister expressed confidence that OPEC+ producers will prolong their output cuts programme through the second half of 2019,” said Han Tan, analyst at futures brokerage FXTM.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-members, including Russia, known collectively as “OPEC+”, have withheld supplies since the start of the year to prop up prices.
Stephen Innes, managing partner at Vanguard Markets, said stronger stock markets also supported oil futures.
“With the Mexican stalemate averted and no harmful shockwaves from this weekend G-20 meeting … oil could trade favourably as WTI and Brent will continue to track the broader risk environment high,” Innes said.
Stock markets rose on Monday after a deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of U.S. tariffs on goods imported from Mexico.
But analysts said there were still concerns about the health of the global economy, with the United States and China still locked in a trade war.
“Slowing global demand appears to be featuring prominently on the markets’ collective mind, as the fallout from heightened trade tensions continues to be felt in the global economy,” said FXTM’s Tan.
“The sustainability of oil’s recent climb could be determined by the outlooks of several key industry bodies scheduled this week, whereby more downcast projections for global demand could prompt traders to continue chipping away at oil,” he added.
Oil major BP is to publish its statistical review of global energy markets on Tuesday, while China on Friday is scheduled to publish its monthly commodities output data.