Oil prices mixed on Saudi Arabia supply comments, trade fears
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NEW YORK, June 3 (Reuters) – Oil futures were little changed on Monday as Saudi Arabia comments indicating OPEC would extend supply cuts supported prices, while concerns that U.S. tariffs on China and Mexico would hurt demand weakened crude market sentiment.
Saudi Arabia signaled that the Organization of the Petroleum Exporting Countries, together with Russia, would continue managing global crude supplies to avoid a surplus.
“We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” Energy Minister Khalid al-Falih was quoted as saying by the Saudi-owned Arab News newspaper.
Brent crude futures lost 16 cents to $61.83 a barrel by 1:12 p.m. GMT (1712 GMT). Prices dropped by more than 3% on Friday, with May recording the biggest monthly loss in six months. U.S. West Texas Intermediate (WTI) crude futures rose 26 cents to $53.76 a barrel.
Brent crude prices have dropped almost 20% from their 2018 peak as global supplies tighten following output curbs by OPEC and Russia, as well as a reduction in Iranian and Venezuelan exports due to U.S. sanctions.
The recent selloff likely helped to solidify the intention of Saudi Arabia, OPEC's defacto leader, to keep tightening output, analysts said.
“This selloff has to have gotten their attention yet again and is precluding them from increasing production,” said John Kilduff, an analyst at Again Capital LLC.
Saudi Arabia pumped 9.65 million barrels of oil per day (bpd) in May, a deeper cut than its production target under the global pact to reduce oil supply, a Saudi oil industry source said on Monday. The nation's output target under the OPEC-led pact is 10.3 million bpd.
A planned June 4 strike by Norwegian workers could also lead to tighter global supply and buttress prices, potentially cutting Norway's oil and gas output by about 440,000 barrels of oil equivalents per day if mediation efforts fail.
Concerns that a U.S.-China trade war, and threats of tariffs on Mexico from the United States, would diminish global crude demand, however, weighed on oil prices.
“Focus has shifted from the supply to the demand side as a U.S.-China trade agreement has proven elusive and as worries over the debilitating effects of tariffs on global economic growth have now shifted to Mexico,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
Mexico on Monday said it would reject a U.S. idea to take in all Central American asylum seekers if it is raised at talks this week with U.S. President Donald Trump's administration, which is threatening to impose tariffs over immigration concerns.
(Additional reporting by Ron Busso and Noah Browning in London, Henning Gloystein in Singapore, Shadia Nasralla in London; Editing by Kirsten Donovan, Alexander Smith, Will Dunham and Diane Craft)