An employee pours a sample of oil from a bottle into a measuring vessel. (Photographer: Chris Ratcliffe/Bloomberg)

Oil Rises as Saudis, Venezuela Seen Carving Deeper Into Supplies

(Bloomberg) -- Oil began the week on the rebound, as Saudi Arabia moved to extend supply curbs and a nationwide blackout threatened deep production cuts in Venezuela.

Futures in New York climbed 1.3 percent after dropping on Friday amid weak U.S. employment figures. Saudi Arabia plans to produce well below 10 million barrels a day in April, a Saudi official said over the weekend. Meanwhile, crude output from fellow OPEC member Venezuela has collapsed in recent days after a four-day power outage, according to a senior oil ministry official there.

Oil Rises as Saudis, Venezuela Seen Carving Deeper Into Supplies

In terms of production, “there’s nothing really bearish about the markets," said Brynne Kelly, an energy trader and analyst who runs The Fundamental Angle, an energy consultancy in New Jersey. “We still have Canada holding back; we still have OPEC cuts. At the moment, inventories aren’t out of line."

Oil has traded in a tight range above $55 for most of this month in New York, after rallying more than 30 percent from December lows amid output curbs led by the Organization of Petroleum Exporting Countries. Disruptions in Venezuela, Libya and Iran have also tightened supplies, although U.S. production remains at a record high.

Turmoil in Venezuela, owner of the world’s biggest crude reserves, is leading its production to slide “significantly,” the head of the International Energy Agency told reporters at an energy conference in Houston. State-owned Petroleos de Venezuela SA and its joint venture partners are struggling to operate wells and other properties during the power outage that began last week, according to the ministry official, who requested anonymity to speak.

The official called the production losses severe but didn’t give specific details.

West Texas Intermediate for April delivery rose 72 cents to $56.79 a barrel on the New York Mercantile Exchange. Brent for May settlement advanced 84 cents to $66.58 a barrel on the London-based ICE Futures Europe exchange.

With plans to export less than 7 million barrels a day, Saudi Arabia will supply clients with significantly less oil than they’ve requested for April, the Saudi official said. With Venezuelan output falling due to U.S. sanctions and power blackouts, refiners have asked for more than 7.6 million barrels a day, the person said.

“Saudi Arabia at the moment is willing to cover any number of compliance sins from others, by adjusting unilaterally,” said Derek Brower, a director at consultant RS Energy Group.

Meanwhile, the U.S. Commerce Department said on Monday that retail sales in the world’s biggest economy rose 0.2 percent last month, offering a sign of stability after a plunge the prior month.

A slew of data releases this week will be closely watched for clues on growth and the impact of central bank policy in the U.S., European Union and China. On the trade front, White House economic adviser Larry Kudlow said Sunday that he’s “optimistic” about a resolution of the U.S.-China dispute despite Beijing’s push-back against Washington’s demands.

Other oil-market news:
  • Gasoline futures climbed 1.4 percent to $1.826 a gallon.
  • OPEC will be squeezed by U.S. shale until the mid-2020s, the International Energy Agency said in a report Monday.
  • A U.S. judge tossed a multibillion-dollar lawsuit accusing international oil traders of conspiring to loot Venezuela’s state-owned oil company.

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