Oil prices rise as Saudi discusses supply cuts

- Reuters, London

Jan 6, 2017-

Oil prices rose on Thursday after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by Opec to reduce global supply.

The Organization of the Petroleum Exporting Countries promised in November to cut output to help prop up prices. Under the deal, Saudi Arabia agreed to cut output by 486,000 barrels per day (bpd), or 4.61 percent of its October output of 10.544 million bpd.

“Aramco is approaching all its customers for possible cuts from February and discussing likely (supply) scenarios,” one source told Reuters. “Nothing is confirmed yet,” the source said, adding the scenarios were for cuts of 3-7 percent.

Investors have been suspicious that Opec may not cut as much as promised, but several sources told Reuters on Thursday the world’s biggest oil exporter intended to reduce exports to comply with the Opec cuts.

Benchmark Brent crude oil was up 45 cents a barrel at $56.91 by 1225 GMT. US light crude oil was up 40 cents a barrel at $53.66. Both contracts rose by around 2 percent on Wednesday. 

“There remains a question mark over whether Opec, with a long history of non-compliance, will actually follow through (with the cuts). Very few respondents expect full compliance,” Singapore Exchange (SGX) said on Thursday, citing results from a survey of its participants. “Three-quarters of those surveyed went for (crude) prices averaging within the current $50-$60 a barrel range (for 2017),” SGX added.

Published: 06-01-2017 09:10

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