SINGAPORE (Reuters) – Oil prices rose around one percent on Monday after Saudi Arabia's main exporter announced cuts in supplies for December, seen as a step to halt a market slump that has seen a decline in crude oil by 20 percent since early October.
Pumpjack is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS / Christian Hartmann
The international benchmark Brent crude oil LCOc1 futures were at $ 71.11 a barrel at 0051 GMT, up 93 cents, or 1.3 percent, from their last close.
The US West Texas Intermediate (WTI) crude oil contract was at $ 60.73 per barrel, up 54 cents, or 0.9 percent from their last settlement.
Saudi Arabia plans to reduce oil supplies to the world market by 0.5 million barrels per day in December, its energy minister said on Sunday, as OPEC's strength faces uncertain prospects in its efforts to persuade other producers to agree to coordinated output cuts.
Khalid al-Falih told reporters that Aramco Saudi customers' crude oil nominations would drop by 500,000 bpd in December versus November due to lower seasonal demand. The cut is a reduction in global oil supply of around 0.5 percent.
The announcement came after crude oil prices fell around 20 percent for a month, as supplies have surged, especially by the top three US, Russian and Saudi Arabian producers.
"Saudi Arabia has stepped up in the bear oil market, proactively announcing they will reduce exports," said Stephen Innes, head of trade for Asia / Pacific at the Oanda futures broker in Singapore.
A big concern for Saudi Arabia and other traditional producers from the Middle East dominated by the Organization of Petroleum Exporting Countries (OPEC) is a surge in US output.
The US energy company last week added 12 oil rigs a week to November 9 looking for new reserves, bringing the total to 886, the highest level since March 2015, energy services company Baker Hughes said on Friday.
The number of rigs is an indicator that US C-OUT-T-EIA crude oil production, which has reached a record of 11.6 million barrels per day (bpd), will increase further.
"One thing is very clear, OPEC is experiencing shock shale because US crude oil production has increased to 11.6 million barrels per day and will exceed the 12 million limit next year," Innes said.
(For a graph of & # 39; oil, storage & drilling production & # 39; click tmsnrt.rs/2DhQOCB)
Reporting by Henning Gloystein; editing by Richard Pullin