Oil prices flipped positive on Monday after weeks of losses had plunged the U.S.-traded resource into a bear market and brought international benchmark Brent perilously close to such a distinction. The price recovery came as OPEC and its allies signaled, if weakly, a willingness to again cut production amid hefty global supply.
Saudi representatives said Sunday that the kingdom would slash its exports unilaterally next month, as a broader OPEC alliance debated — but didn’t agree to — a collective production cut.
“We need to do whatever it takes to balance the oil market,” Saudi Arabian Energy Minister Khalid al-Falih added on Monday at the start of an international gathering of petroleum ministers and industry leaders, according to the Wall Street Journal.
Falih, the de facto head of the Organization of the Petroleum Exporting Countries, said if current supply and demand levels don’t shift, the oil-cartel and its partner producers, led by Russia, would need to cut production by around 1 million barrels a day at the group level.
Meanwhile, Russia, the world’s largest producer, sent mixed signals on whether it would pull back on supply — after moving in lockstep on such matters with OPEC for more than two years, the Journal reported.
West Texas Intermediate crude for December delivery CLZ8, +1.10% rose 25 cents, or 0.4%, at $60.44 a barrel on the New York Mercantile Exchange. The contract settled Friday at $60.19, marking the lowest front-month contract settlement since March 8, according to FactSet data. Prices lost 4.7% for last week, tallying their fifth straight weekly drop.
Friday’s loss counted as the 10th straight session decline, matching a skid last recorded in 1984. Last week, the U.S. crude benchmark descended into a bear market, usually defined as a drop of at least 20% from a recent peak, ending its longest bull market since early 2015.
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January Brent crude LCOF9, +1.23% rose 68 cents, or 1%, to $70.86 a barrel on ICE Futures Europe early Monday.
Brent oil is down about 18% from its recent October peak and was also flirting with a bear market. A settlement of $69.032 would mark Brent’s entry into a bear market. For last week, Brent logged a 3.6% decline, according to FactSet data.
Overall, crude output in Saudi Arabia, Russia and the U.S. had climbed ahead of U.S. sanctions on the Iranian energy sector, which kicked in earlier this month and were expected to contribute to tighter global oil supplies. Instead, the U.S. granted eight countries temporary waivers, allowing them to continue buying Iranian oil.
“Exemptions [for Iran] granted by the U.S. mean that these outages are considerably smaller than expected. What is more, U.S. oil production is rising faster than had been thought. The combination of these factors means there is a risk of a sizeable oversupply on the oil market late this year and next year,” said analysts at Commerzbank in a note.
Natural-gas prices NGZ18, +1.94% meanwhile, continued their march higher, up 2.5% early Monday, after the contract rallied to its highest finish in nearly two years last week as traders fretted over tight supplies and cold weather.
Read: Natural gas rallies to highest finish in nearly 2 years
Read: Saudi Arabia ponders a future without OPEC
December gasoline RBZ8, +1.83% rose 0.9% to $1.6367 a gallon. It shed over 5% for the week to trade at its lowest since October 2017. December heating oil HOZ8, +0.08% traded at $2.1784 a gallon, up nearly 0.3%.
Christopher Alessi contributed to this report.
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