By Sonali Paul
MELBOURNE (Reuters) – Oil costs rose Monday, driven by Saudi optimism about Asia’s call and Iraq’s commitment to intensify source cuts, uncertainty about an agreement to help america’s economic recovery limited profits.
U.S. West Texas Intermediate (WTI) crude oil futures rose 50 cents, or 1.2%, to $41.72 a barrel at 0301 GMT, while Brent futures rose 40 cents, or 0.9%, to $44.80 a barrel.
Both reference contracts fell on Friday, hurt by the call of concern, however, Brent ended the week with a 2.5 percent hike and the WTI by 2.4%.
“Aramco’s weekend reviews are the driving force right now,” said Michael McCarthy, market strata at CMC Markets and Stockbroking.
Saudi Arabia’s executive leader Aramco, Amin Nasser, said Sunday that he saw the call for oil to recover in Asia as economies opened up after the flexibilization of coronavirus blockades.
“He painted a rosy picture on the outlook for demand in the Asian region,” McCarthy said.
On the source side, Iraq announced Friday that it would cut oil production by 400,000 more barrels, according to August and September to compensate for its overproduction over the more than 3 months. This resolution would do so to meet its consistent percentage of cuts through the Organization of Petroleum Exporting Countries and its allies, known as OPEC as a whole.
The sharpest relief will bring Iraq’s overall relief to 1.25 million b/d this month and next.
“Saudi Arabia and Iraq that forge greater relations in the oil agreement are for the compliance perspective,” AxiCorp market strata Stephen Innes said.
Saudi and Iraqi energy ministers said at a junta that OPEC’s efforts would improve the stability of global oil markets, boost their balance, and send positive signals to markets.
As hopes for stalled talks between US Democrats and the White House about a new program for U.S. states that spoke in cash and affected by the coronavirus pandemic increased, delays in reaching a deal weighed on the market.
U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both said they were willing to restart talks on a deal to cover the rest of 2020.
“The longer this drags on the worse it is for the demand scenario,” McCarthy said.
(Report through Sonali Paul; edited through Richard Pullin)