NEWS

Crude-oil futures settled higher on Tuesday, as a pledge from Saudi Arabia to reduce monthly crude exports, talk of progress toward a balanced market from OPEC and a hurricane-induced slowdown in crude output lifted U.S. prices to their highest level in over a week.

On the New York Mercantile Exchange, November West Texas Intermediate crude the U.S. benchmark, gained $1.34, or 2.7%, to settle at $50.92 a barrel. That was the first back-to-back gain since the period ended Sept. 25 and the highest finish since Sept. 29, according to FactSet data. December Brent crude the global oil benchmark, advanced 82 cents, or 1.5%, to end at $56.61 a barrel on London’s ICE Futures exchange.

Global crude prices climbed “following the shut in of the vast majority of offshore production in the Gulf of Mexico,” said Troy Vincent, oil analyst at ClipperData. “The decline in U.S. offshore production, while temporary, comes amid exports rising to record-highs given WTI’s continued steep discount to Brent.”

That could lead to a sizable draw in U.S. crude stockpiles for the current week, which would reveal itself in data released next week, he said. Nearly 59% of Gulf of Mexico oil production remains shut in as of Tuesday, according to the Bureau of Safety and Environmental Enforcement, following the storm formerly known as Hurricane Nate, which passed through the Gulf over the weekend. Traders also looked to talk of a global oil market rebalance.

“The strongest global demand growth we have seen in at least the last two years, if not longer, gets some of the credit [as] it appears that [the Organization of the Petroleum Exporting Countries] sees the glut of oil almost gone,” said Phil Flynn, senior market analyst at Price Futures Group. “At the same time OPEC is calling on shale oil producers to help push prices even higher and complete one of the greatest oil and product supply drains in recorded history.”

OPEC’s Secretary-General Mohammed Barkindo on Tuesday called on U.S. shale producers to help curb the global supply glut in the oil market that has kept a lid on prices, helping bolster optimism that more efforts would be taken to keep supplies in check. And on Monday, OPEC heavyweight Saudi Arabia said it would slash exports by 7% in November, compared with the same period last year, to further efforts by OPEC and other producers to stabilize prices.

Meanwhile, “geopolitical risk continues to be elevated in the current market, with President [Donald] Trump’s threat to decertify the Iranian nuclear deal serving as the latest high-profile example,” said Robbie Fraser, commodity analyst at Schneider Electric. “The deal remains worth watching in terms of global oil dynamics considering the rapid rise in total Iranian oil exports that came with the removal of international sanctions in 2015,” he said in a note.

Looking ahead, the oil market is awaiting inventory data from the American Petroleum Institute late Wednesday and the Energy Information Administration’s weekly supply report Thursday. They are each delayed by a day because of the Columbus Day holiday. Analysts polled by S&P Global Platts expect the EIA report to show a drawdown of 400,000 barrels of crude oil for the week ended Oct. 6. Monthly reports from OPEC and the EIA are also due Wednesday, with the International Energy Agency’s due Thursday.