© Reuters. FILE PHOTO: The sun can be seen behind a crude oil pump jack in the Permian Basin in Loving County
From Sonali Paul
MELBOURNE (Reuters) – Oil prices rose on Monday, aided by Saudi optimism about Asian demand and Iraq’s promise to deepen supply cuts, amid uncertainty over a deal to support US economic recovery limited profits.
US West Texas Intermediate (WTI) crude () futures rose 50 cents, or 1
Both benchmark contracts fell on Friday, hurt by demand concerns, but Brent still ended the week down 2.5% and WTI down 2.4%.
“Comments from the weekend from Aramco are the driving force right now,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking.
Amin Nasser, chief executive of Saudi Arabian Aramco (SE :), said on Sunday that he saw a recovery in oil demand in Asia as economies gradually open up after the coronavirus lockdowns are eased.
“He painted a rosy picture of the outlook for demand in Asia,” said McCarthy.
On the supply side, Iraq said Friday it would cut its oil production by another 400,000 barrels a day in August and September to offset overproduction over the past three months. The move would help meet the share of cuts by the organization of the petroleum exporting countries and their allies, collectively known as OPEC +.
The sharper cut will reduce Iraq to a total of 1.25 million bpd this month and next.
“Saudi Arabia and Iraq, which are forging better relations on the oil deal, are great for the compliance prospect,” Stephen Innes, market strategist at AxiCorp, said in a note.
The Saudi and Iraqi energy ministers said in a joint statement that OPEC + efforts would improve the stability of global oil markets, accelerate their balancing and send positive signals to markets.
As hopes rose of deadlocked talks between U.S. Democrats and the White House over a new package of assistance to U.S. states hit by the coronavirus pandemic, delays in reaching a deal weighed on the market.
U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both said they were ready to resume talks on a deal for the remainder of 2020.
“The longer this takes, the worse it is for the demand scenario,” said McCarthy.
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