Oil traded near $51 a barrel on concerns record output by Saudi Arabia may exacerbate a supply glut, and as President Donald Trump continues to call for lower prices.
Futures in New York halted a decline, after slumping 7.7% to the lowest level in more than a year on Friday. Trump reiterated his view that falling oil prices are great even after the US benchmark plunged the most last week since January 2016.
Saudi Arabia’s oil minister suggested last week that the kingdom has boosted output above 10.7 million barrels, while he added the world’s biggest exporter won’t oversupply the market.
The American crude marker teeters near the $50 threshold as Iranian oil will keep flowing into international markets after President Trump granted waivers to some nations, while growing inventories in the US increased the prospect of higher global supplies.
Traders are assessing whether the Organisation of Petroleum Exporting Countries and its allies will decide to trim output when they meet early next month in Vienna.
"While all eyes are on what OPEC will decide at the upcoming meeting, investors see a loosening supply and demand balance," Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting, said by phone from Tokyo.
"Saudis may have to give consideration to Trump’s wish for lower crude prices."
West Texas Intermediate for January rose 73 cents to $51.15 a barrel on the New York Mercantile Exchange at 08:27. The contract plummeted 10.7% last week to $50.42. There was no settlement on Thursday due to the US Thanksgiving holiday. Total volume traded was 84% above the 100-day average.
Brent for January settlement climbed $1.14 to $59.94 a barrel a barrel on London’s ICE Futures Europe exchange. The contract slumped on Friday to below the $60 threshold for the first time since October 2017. The global benchmark traded at a $8.72 premium to WTI.
The Twitter comment by Trump - who’s made his opposition to OPEC a regular theme in his Tweets - comes after he thanked Saudi Arabia last week for lower oil prices. He has also been critical of the Fed, describing the central bank as a "problem" as he called for lower interest rates.
Saudi Arabia may be doing its share of lowering prices amid mounting pressure from Trump. The kingdom is producing oil in excess of its October output of 10.7 million barrels a day, Energy Minister Khalid Al-Falih said last week. He said while demand for Saudi crude may be lower in January than in December, his country will not export oil that customers don’t need.
OPEC and its partners are set to meet on December 6 in Vienna, but the direction of next year’s oil prices may well be decided later this week when the key decision makers are set to gather on the sidelines of the G20 summit in Buenos Aires. Saudi crown prince and Russian president are both said to be in the Argentinian capital, along with their energy ministers.
Other oil-market news: Hedge funds haven’t been this pessimistic about global oil prices since Brent crude was spiraling into its worst rout in a generation almost three years ago. Oil is unlikely to return to levels much above $100 a barrel and current prices are making it difficult for major producers such as Angola, according to the country’s president.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER