Oil Rises As Saudis Advocate Cooperation To Stabilize Market
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Brent crude futures rose 2 percent on Monday, adding to strong gains last week, on increasing hopes that the market has bottomed out and as OPEC kingpin Saudi Arabia said it would work with other producers to limit oil market volatility.
Since Feb. 11, the last time Brent was below $30, the benchmark price has risen by 17 percent, though prices are still a fraction of the $115 of 20 months ago.
“The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action,” the Saudi cabinet said in a statement.
However, Iran remains the main obstacle to a global output freeze because it is determined to ramp up supply after the country’s emergence from international economic sanctions in January.
On Monday Iran said it had increased exports steeply over the past month. Exports climbed as high as 1.75 million barrels per day, adding to an already oversupplied market.
“There is still a lot of downside risk … but the U.S. crude market seems to have passed the worst point and crude runs should start creeping higher, taking pressure off inventory levels,” said Richard Gorry, director of JBC Energy Asia.
Financial data also suggested sentiment might be shifting.
“There are tentative signs the worst may be over for commodities, at least judging by the pick-up in investor sentiment,” Barclays said.
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