Oil rose for a second day after a drone attack on a Saudi Arabian oil field brought geopolitical risks back into focus, and as the prospect of more US-China trade meetings spurred some investor optimism.
Futures in New York rose 1 percent after climbing 0.7 percent on Friday to cap the first weekly gain in three. Yemeni rebels attacked oil and gas facilities at Shaybah field in the southeast part of the kingdom over the weekend, although there was only a small fire and no disruption to production, Saudi Aramco said in a statement.
While President Donald Trump said the US is talking with China on trade but suggested he wasn’t ready to sign a deal yet.
Crude has fallen around 17 percent from a peak in late April as the US-China trade war intensified, casting a pall over the global growth outlook. While a series of attacks on tankers and energy facilities in the Middle East have provided some temporary support to prices, oversupply remains the key concern for the market.
Meanwhile, there are signs Saudi Arabia is struggling to muster support for its bid to convince OPEC and its allies to cut production further.
The attack in Saudi Arabia is “keeping markets firm”, said Michael McCarthy, chief markets strategist at CMC Markets Asia Pacific Pty in Sydney. The apparent easing of tensions between the US and China is also helping, he said.
West Texas Intermediate crude for September delivery rose 53 cents, or 1 percent, to $55.40 a barrel on New York Mercantile Exchange as of 11:31am in Singapore. The contract, which will expire on Tuesday, advanced 0.7 percent last week.
Brent for October settlement increased 65 cents, or 1.1 percent, to $59.29 per barrel on the ICE Futures Europe Exchange. The global benchmark is trading at a premium of $3.94 a barrel to WTI, near the smallest gap since March 2018.
Yemen’s Houthi rebel leader Abdul Malik al-Houthi said the drone strike was meant to deliver an “important message” to the Saudi Arabian-led coalition. The remote Shaybah field produces around 1 million barrels a day, just under 10 percent of Aramco’s total production capacity, including some of the highest-quality oil from the kingdom.
Recent phone calls between US and Chinese trade negotiators had been “positive” and more teleconference meetings are planned over the next week to 10 days, White House economic director Larry Kudlow said Sunday. However, President Trump linked the discussions to demonstrations in Hong Kong, saying for the first time on camera that it would be harder to reach a deal if there’s a violent conclusion to the protests.
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