MELBOURNE (Reuters) – Oil costs rose Monday, driven by Saudi optimism about Asia’s call and Iraq’s promise to deepen source cuts, uncertainty over an agreement to help America’s economic recovery limited profits.
Brent LCOc1 crude oil futures rose 34 cents, or 0.8%, to $44.74 barrel at 0641 GMT, while West Texas Intermediate (WTI) U.S. CLc1 crude futures raised 47 cents, or 1.1%, to $41.69 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 (2222.SE), Amin Nasser, said Sunday that he saw oil call for an uptick in Asia as economies opened up after the easing 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 are forging greater relations in the oil deal for the compliance prospects,” 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.
While hopes grew on stalled talks between U.S. Democrats and the White House on a new support package for cash-strapped U.S. states hit by the coronavirus pandemic, delays in reaching a deal weighed on the market.
U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said they were in a position to resume talks on an agreement covering the remainder of 2020.
“The longer it goes on, the worse the call, ” said McCarthy.
He claimed that there is strong technical resistance to the WTI around $42.50 and between $45 and $45.50 for the Brent.
Holidays in Japan and Singapore on Monday slowed market activity in Asia.
Reporting through Sonali Paul; edited through Richard Pullin
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