Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.
SINGAPORE: Oil held near US$74 a barrel as President Donald Trump’s tweet urging OPEC to pump more to temper prices did little to assuage concerns over a global crude supply crunch.
Futures in New York were little changed following U.S. Independence Day. Trump tweeted the group is “doing little to help” reduce gasoline costs and “if anything, they are driving prices higher.”
Despite the key member Saudi Arabia reaffirming that the cartel and its allies will boost output, Goldman Sachs Group Inc. warned that oil is likely to lead a new rally as the market faces significant supply risks from Venezuela to Iran.
Oil this month rallied to the highest level in more than three years as the Organization of Petroleum Exporting Countries’ output increase plan was overshadowed by supply disruptions in Libya, Canada and Venezuela.
While Saudi Arabia is facing mounting pressure from Trump to do more, America’s oil sanctions on Iran and trade frictions with China are adding to uncertainties as the planned U.S. tariffs on Chinese goods are set to start Friday.
“Investors are cautious since no one knows to what extent the Iranian sanctions will impact the market, and disruptions globally are taking supplies out faster than expected,” said Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul.
“President Trump’s tweets are adding to the existing concerns. All factors will push prices higher, but we’re still waiting to gauge what level it will surge to with all the uncertainties.”
West Texas Intermediate crude for August delivery traded at $73.86 a barrel on the New York Mercantile Exchange, down 28 cents, at 3:01 p.m. in Singapore. The contract added 20 cents to $74.14 on Tuesday, and there was no settlement Wednesday due to the U.S. holiday.
Brent for September settlement lost 52 cents, or 0.7 percent, to $77.72 a barrel on the London-based ICE Futures Europe exchange. The contract on Wednesday gained 48 cents to $78.24. The global benchmark traded at a $6.30 premium to WTI for the same month.
Yuan-denominated futures were little changed at 497.6 yuan a barrel on the Shanghai International Energy Exchange, after losing 1.4 percent Wednesday.
President Trump wrote in the tweet that the “OPEC Monopoly must remember that gas prices are up & they are doing little to help” and that America defends many OPEC members for “very little” money. “This must be a two way street. REDUCE PRICING NOW!”
Meanwhile, Goldman said the market will stay in a deficit in the second half of the year as actual and potential supply losses from Iran, Venezuela, Libya and Canada far exceed the proposed boost from the group and its partners.
In the latest of the U.S.-China trade spat, China’s Commerce Ministry spokesman Gao Feng said America’s tariffs will backfire and damage the world economy because more than half of the $34 billion of Chinese exports are produced by foreign companies. “China won’t fire the first shot,” Gao added.
The Asian nation’s retaliatory tariffs will become effective “immediately” after the U.S. acts, according to the customs authority. - Bloomberg
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