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Oil rose for a second day after a drone attack on a Saudi
Arabian oil field brought geopolitical risks back into focus, and as the
prospect of more US-China trade meetings spurred some investor optimism.
Futures in New York advanced 1.2% after climbing 0.7% on
Friday to cap the first weekly gain in three. Yemeni rebels attacked oil and
gas facilities at Shaybah field in the southeast part of the kingdom over the
weekend, although there was only a small fire and no disruption to production,
Saudi Aramco said in a statement.
President Donald Trump said the US is talking with China on
trade but suggested he wasn’t ready to sign a deal yet.
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Crude has fallen around 17% from a peak in late April as the
US-China trade war intensified, casting a pall over the global growth outlook.
While a series of attacks on tankers and energy facilities in the Middle East
have provided some temporary support to prices, oversupply remains the key
concern for the market. Meanwhile, there are signs Saudi Arabia is struggling
to muster support for its bid to convince OPEC and its allies to cut production
The attack in Saudi Arabia is “keeping markets firm,”
said Michael McCarthy, chief markets strategist at CMC Markets Asia Pacific Pty
in Sydney. The apparent easing of tensions between the US and China is also helping,
West Texas Intermediate crude for September delivery rose 64
cents, or 1.2%, to $55.51 a barrel on New York Mercantile Exchange as of 07:34 in
London. The contract, which will expire on Tuesday, advanced 0.7% last week.
READ: Trump’s oil sanctions leave Russian exporters $1bn
Brent for October settlement increased 79 cents, or 1.4%, to
$59.43 per barrel on the ICE Futures Europe Exchange. The global benchmark is
trading at a premium of $3.97 a barrel to WTI, near the smallest gap since
Yemen’s Houthi rebel leader Abdul Malik al-Houthi said the
drone strike was meant to deliver an “important message” to the Saudi
Arabian-led coalition. The remote Shaybah field produces around 1 million
barrels a day, just under 10% of Aramco’s total production capacity, including
some of the highest-quality oil from the kingdom.
Recent phone calls between US and Chinese trade negotiators
had been “positive” and more teleconference meetings are planned over
the next week to 10 days, White House economic director Larry Kudlow said
Sunday. However, President Trump linked the discussions to demonstrations in
Hong Kong, saying for the first time on camera that it would be harder to reach
a deal if there’s a violent conclusion to the protests.
Other oil-market news
The Iranian supertanker detained last month on suspicion of
hauling oil to Syria in violation of European sanctions set sail from Gibraltar
waters after being released by the British territory and is now signaling
Greece as its next destination.
Oil explorers picked up drilling activity in US fields for
the first time in almost two months, data released Friday by oilfield-services
provider Baker Hughes showed.
Bets on a West Texas Intermediate crude rally jumped 13% in
the week ended August 13 – the day the US president surprised financial markets
with a pause in the trade war with China, according to data released Friday.
The imminent overhaul of global ship-fuel regulations is
finally delivering a long-awaited benefit to Asian oil refiners.