Oil futures rose on Tuesday to their highest levels in almost six weeks on optimism that OPEC and other producing countries will agree to extend output cuts to support prices.
Brent LCOc1 was up 67 cents or 1.07% at $63.26 a barrel by 1305 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 were up 63 cents, or 1.09%, at $58.48 a barrel.
Brent reached its highest level since Aug. 1, while U.S. crude rose to its highest since July 31.
Prince Abdulaziz bin Salman, Saudi Arabia’s new energy minister and a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), said the kingdom’s policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained.
He added that the so-called OPEC+ alliance, made up of OPEC and non-OPEC producers including Russia, would be in place for the long term.
“Clearly, the Kingdom wants higher oil prices … Prince Abdulaziz made clear that ‘no radical’ change in the Saudi oil policy is forthcoming”, said Tamas Varga of oil brokerage PVM.
“It will be interesting to see if we get any hint from him whether the producer group in general and Saudi Arabia in particular sees the need for deeper production cuts”.
The OPEC+ joint ministerial monitoring committee (JMMC), which reports on compliance with the cuts, is due to meet on Thursday in Abu Dhabi.
There have been concerns about producers’ adherence to the agreement as OPEC members Iraq and Nigeria, among others, exceeded their quota in August and Russia also did not fully comply.
“Markets will need to see concrete progress on the production front, even as the world’s economy slows, to sustain gains,” said Jeffrey Halley, senior market analyst at OANDA.
Should oil markets close higher on Tuesday it will be the longest run of gains since late July but headwinds remain due to U.S.-China trade tensions.
Goldman Sachs lowered its forecast on 2019 oil demand growth to 1 million barrels per day (bpd), down 100,000 bpd, but left its 2020 demand growth estimate broadly unchanged at 1.4 million bpd.
“Our oil supply-demand outlook for 2020 calls for additional OPEC production cuts to keep inventories near normal,” Goldman analysts wrote in a note.
In the United States, crude stockpiles are likely to have fallen for a fourth consecutive week last week, a preliminary Reuters poll showed on Monday.
Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels in the week to Sept 6.