Crude oil futures rose on Tuesday after Saudi Arabia pledged to work towards oil price stability, while a strong US dollar and an expected rise in US crude stocks kept the gains in check.
Brent futures for January climbed 23 cents to $45.06 a barrel as of 0658 GMT, while US West Texas Intermediate (WTI) crude was up 32 cents at $42.07 a barrel, after hitting $42.18 earlier in the session.
“The focus is turning to the upcoming Opec meeting and the hope that some production cuts will be forthcoming. Opec member comments leading into the December 4 meeting are likely to continue to drive sentiment,” ANZ said in a note on Tuesday.
Saudi Arabia led a shift by the Organisation of the Petroleum Exporting Countries (Opec) in November 2014 to defend market share against competing supplies, rather than cut output to prop up prices.
The kingdom’s cabinet said on Monday, though, it was ready to cooperate with Opec and non-Opec countries to achieve market stability, days before Opec meets to review its year-long policy of not supporting prices.
Yet some doubted the Saudi comment would lead to any significant change in policy. “The council (of ministers) … stressed the kingdom’s role in (achieving) the stability of the oil market and its continuous readiness and efforts to cooperate with all Opec and non-Opec countries to maintain the stability of the market and prices,” the cabinet said.
Algeria’s prime minister, in a speech at the Gas Exporting Countries Forum (GECF) Summit in Teheran, urged leading oil market players to control output levels. “The main players in the petroleum market must certainly reach an agreement about the levels of production,” Algerian Prime Minister Abdelmalek Sellal said.
“If the petroleum market is not controlled, it will witness strong volatility for prices,” he added, warning that this would hurt the “interests of producers and consumers and the whole petroleum industry”.
“As long as nothing concrete is being rolled out, we remain sceptical of the possibility. Therefore … we would think that the December 2015 Opec meeting would be a non-event again,” Daniel Ang at Phillip Futures said on Tuesday. ANZ added in its note that investors are awaiting US crude stocks data, with expectations of a small increase.
A senior Gulf Opec delegate said earlier this month Opec was likely to stick to the no-cut policy if major non-Opec producers are not willing to help.
Oil traders watch any comment from Saudi Arabia’s political leadership for signs it might revert from its policy of recovering market share to its old policy, dropped in November 2014, of defending oil prices by cutting output. US commercial crude oil stocks probably gained 1.1 million barrels for the week ended Nov. 20, according to a preliminary Reuters survey of five analysts on Monday. Another rise would be the ninth consecutive weekly gain.