SINGAPORE: Oil prices climbed on Monday, pushed higher by comments from Saudi Arabia that cooperation between oil producers who are currently withholding supplies would continue beyond 2018.
Strong global economic growth and a drop in US drilling activity also supported crude, traders said.
Brent crude futures were at $68.89 a barrel at 0315 GMT, up 25 cents, or 0.4 percent, from their last close. Brent on January 15 rose to $70.37, its highest since December 2014.
US West Texas Intermediate (WTI) crude futures were at $63.61 a barrel, up 24 cents, or 0.4 percent, from their last settlement. WTI climbed to $64.89 on January 16, also its highest since December 2014.
Saudi Arabia, the world’s top oil exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said on Sunday major oil producers were in agreement they should continue cooperating on production after their deal on supply cuts expires this year.
“There is a readiness to continue cooperation beyond 2018 ... The mechanism hasn’t been determined yet, but there is a consensus to continue,” Saudi Arabia’s Energy Minister Khalid Al-Falih said in Oman.
A group of oil producers including OPEC and Russia, the world’s biggest crude producer, started to withhold production in January last year to prop up prices. The deal is set to expire at the end of 2018.
In the US, declining drilling activity for new oil production further supported crude.
US drillers cut five oil rigs in the week to Jan. 19, bringing the count down to 747, energy services firm Baker Hughes said on Friday.
Despite this, the rig count in 2017 and early this year remains much higher than in 2016, resulting in a 16 percent rise in US production since mid-2016, to 9.75 million barrels per day.
Beyond supplies, strong global economic growth was also supporting oil prices.
“During the last four quarters, the underlying global growth dynamic began to shift... Global growth has become synchronized and accelerated above trend,” US bank Morgan Stanley said over the weekend in a note.
In the latest indicator, Japanese manufacturing sentiment in January jumped to an 11-year high, the Reuters Tankan poll showed on Monday, highlighting the optimism driven by nearly two years of economic expansion.
Despite the well-supported market, analysts warned oil markets had lost some steam since their peak early last week.
Bernstein Energy said on Monday that oil inventories might start rising soon due to a slowdown in demand which typically happens at the end of the northern hemisphere winter.
“We expect... an end to the strong (inventory) draws we have seen... With the strong correlation between inventories and crude prices, this perhaps means we should expect crude prices to moderate in the near term,” Bernstein said.
Oil rises as Saudi Arabia says producers will cooperate beyond 2018
Oil rises as Saudi Arabia says producers will cooperate beyond 2018
Saudi Fund for Development, Omani Ministry of Finance sign MoU to establish industrial city
RIYADH: The CEO of the Saudi Fund for Development, Sultan bin Abdulrahman Al-Murshid, and the Omani Minister of Finance, Sultan bin Salem Al-Habsi, signed a development memorandum of understanding to support the establishment of the Thumrait Industrial City Project in Oman.
The project is funded by Saudi Arabia through the SFD with $40 million.
The signing ceremony was attended by the Saudi Ambassador to Oman, Ibrahim bin Saad bin Bishan, and several officials from both sides.
The MoU aims to develop the industrial, logistical, developmental, and social sectors in the Dhofar Governorate through the establishment of the integrated Thumrait Industrial City, covering an area of approximately 3.94 million sq. meters.
The city will be equipped with all necessary infrastructure services. The project includes the construction and equipping of administrative and service buildings as well as public facilities. It also includes road works and electrical installations, as well as water networks and the construction of two wastewater treatment plants.
Engineering consultancy services will also be provided, reflecting the expected developmental impact in enhancing the industrial and service sectors in the governorate.
The CEO of the SFD affirmed that this MoU reflects the Kingdom’s efforts, through the fund, to support development sectors in Oman and strengthen the close development partnership between the two sides.
This will be achieved through the implementation of high-quality projects that contribute to developing infrastructure and creating an integrated and stimulating environment for industrial and logistical activities, which will positively impact the empowerment of the private sector and enhance economic as well as social development.
For his part, the Omani Minister of Finance emphasized that the signing of this agreement stems from a desire to strengthen developmental, economic, and investment relations and encourage partnerships across various sectors between the two countries.
At a time when the world is getting fragmented due to geopolitical tensions and ongoing wars, Saudi Arabia’s development fund is becoming a beacon of hope, as it continues to provide soft loans and grants for emerging economies.
Established in 1974 and commencing operations in 1975, the Saudi Fund for Development has financed more than 800 development projects in over 100 countries, with a cumulative value exceeding $21 billion.
SFD’s financing spans across multiple sectors, including health, education, and transport, as well as water and energy, with the aim of improving living conditions, enhancing capacity building, and creating job opportunities for millions of people in emerging nations.
