Crude on rise after Saudi price pledge

The Organization of Petroleum Exporting Countries is considering raising its official production target by 1 million barrels a day to 31 million, to take into account returning member Indonesia, according to two OPEC delegates.

Oil advanced on Saudi Arabia’s repeated pledge to work with OPEC and other producers to stabilise global crude markets. Prices at lower than $40 are a “strong support level” as refineries are set to boost demand for crude oil, BNP Paribas SA said this week.

U.S. West Texas Intermediate (WTI) crude futures fell US$1.26 a barrel to US$40.64 a barrel by 0418 ET.

January futures for North Sea Brent blend decreased by 0.46% to $44.22 per barrel, while January futures for WTI crude oil were down 1.83% to $41.13 per barrel, according to the report. “The speculative market is the one that is controlling the market”, Del Pino said.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $3.11 a barrel, compared to $2.76 by close of trade on Friday. “If (that) is subject to cooperation with non-OPEC producers then it means we are going to do nothing”.

Regarding US commercial crude oil stocks, a preliminary Reuters survey with five analysts showed on Monday a crude stock build of 1.1 million barrels on average in the week ended November 20, or a rise for a ninth consecutive week.

Oil prices rose on Tuesday as tensions in the Middle East escalated following the downing of a Russian-made fighter jet near the Syrian-Turkish border and a weaker US dollar provided incentive for investors to buy more oil.

As the nuclear agreement isn’t complete, and OPEC typically only confronts problems when necessary, Iran’s return may not come up for discussion on December 4, said Mike Wittner, head of oil market research at Societe Generale SA in NY.

The U.S. Federal Reserve’s broadly upbeat summary of the US economy also lifted confidence, with most markets in Asia advancing after a rally on Wall Street.

Christine Lagarde, managing director of the global Monetary Fund (IMF), said this month that Gulf countries should introduce a regional value-added tax (VAT) as soon as possible to raise revenues at a time of low oil prices. The strength of the U.S. dollar near seven-month highs has a negative impact on crude prices making oil and other commodities more expensive for holders of other currencies.