(Bloomberg) -- The oil market’s more concerned about U.S. shale supplies than any repercussions from a crackdown that’s enveloped royals and billionaires in Saudi Arabia, OPEC’s biggest producer and the world’s top crude exporter.
The Saturday purge that brings Saudi Crown Prince Mohammed bin Salman closer than ever to power signals his nation will persist with a strategy he’s backed -- limit output as part of a deal with other producers aimed at clearing a global glut. Oil was already pricing in expectations for that policy to continue even before the crackdown, meaning production from American shale fields remains the primary source of uncertainty for the market.
Speculation that the Organization of Petroleum Exporting Countries and allies including Russia will prolong the output-cut deal past its March expiry has sustained prices in a bull market, with futures in London climbing about 12 percent over the past four weeks. Prince Mohammed said last month he backed lengthening the curbs. Iraq and Kuwait have also signaled support. After rising $1.45 a barrel on Friday, Brent crude’s up less than 40 cents following the weekend Saudi purge.
“The purge in Saudi Arabia has been at the center of attention over the weekend but for investors in the oil market, it has been an expected scenario since the current Crown Prince took over,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone from Seoul. “More importantly, the market has its eyes set on the changes surrounding U.S. shale, such as the cut in drilling, as well as the extension of OPEC output cuts.”
While the number of rigs drilling for crude in the U.S. slipped by eight to 729 last week, the total count is 62 percent higher than a year earlier. Total American production climbed by 46,000 barrels a day to 9.55 million in the week ended Oct. 27, near the highest level in more than two years, according to data from the U.S. Energy Information Administration.
Brent crude, the benchmark for more than half the world’s oil, was up 37 cents at $62.44 a barrel on the London-based ICE Futures Europe exchange by 6:21 p.m. Singapore time. West Texas Intermediate, the U.S. marker, rose 30 cents to $55.94 a barrel on the New York Mercantile Exchange.
“Anything to do with Saudi Arabia is a bit unsettling for the oil market, but there’s no indication at this stage of any issues that may lead to a supply disruption,” said Ric Spooner, an analyst at CMC Markets in Sydney. “Oil is continuing to probe for a level that will attract new short-term production, particularly from U.S. shale, and we haven’t yet seen evidence of that.”
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