Crude oil price is on track for its biggest advance in five months as the world’s biggest oil exporters prepare to discuss global supplies. Futures rose as much as 3.6% in New York on Monday, clawing back almost half of Friday’s loss. All eyes are on this week’s G20 gathering in Argentina that will include Saudi Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin. That event will be followed by a key Opec meeting next week in Vienna.
“There has been sufficient commentary out of various Opec members about addressing this oversupply situation, either at the G20 or at the upcoming Opec meeting,” said John Kilduff, a partner at New York-based hedge fund Again Capital Llc.
The US benchmark crude has dropped about 20% this month amid larger-than-expected exports of Iranian oil and record US shale production. Meanwhile, Saudi Arabia is pumping more crude than at any time since its first barrel was extracted 80 years ago amid pressure from US President Donald Trump.
Russia has signalled “they aren’t excited about doing a cut. If Saudi decides to do a cut, it’s really going to be giving up market share to the United States,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC. “This week is going to be volatile with Saudi Arabia and Russia going to the G20.”
Goldman Sachs Group Inc. is forecasting returns of about 17% in the coming months, describing the current situation as unsustainable and touting the G20 meeting in Buenos Aires as a potential turning point.
West Texas Intermediate (WTI) for January advanced $1.29 to $51.71 a barrel at 12:31pm on the New York Mercantile Exchange. The contract plummeted almost 11% last week.
Technical indicators followed by chart-watching traders showed the US benchmark crude deep in oversold territory, signalling a bounce back was in store.
Brent for January settlement added $1.72 to $60.52 on London’s ICE Futures Europe exchange, after slumping below $60 on Friday for the first time since October 2017. The global benchmark traded at an $8.85 premium to WTI.
Trump, who has made opposition to Organization of the Petroleum Exporting Countries (Opec) a recurring theme, continued to comment on Twitter about the benefits of cheaper crude. He thanked Saudi Arabia last week for lower oil prices.
The G20 meeting will have an impact on Opec’s deliberations, according to Citigroup Inc.
“It’s indeterminate at this moment on where oil prices will be going,” Citigroup’s global head of commodity strategy Ed Morse said in a 23 November video presentation.