Oil Rises as Aramco Said to Cut Output at Biggest Offshore Field

(Bloomberg) -- Oil climbed as Saudi Arabia was said to curtail some output from its Safaniyah offshore oil field, the largest in the world.

Futures in New York rose as much as 2.2 percent Friday, pushing toward its biggest weekly gain in a month. Saudi Arabia was said to trim supply from Safaniyah to repair a damaged power cable, while Russia plans to accelerate the output cuts it agreed to with OPEC+. President Xi Jinping said U.S.-China trade talks would continue next week in Washington, as the two sides race to reach a deal that would avert a tariff increase on Chinese goods after March 1.

Oil Rises as Aramco Said to Cut Output at Biggest Offshore Field

Oil has resumed its rally this week -- taking its advance this year to about 22 percent -- after Saudi Arabia announced it would cut supply even further than agreed under a deal with fellow members of the Organization of Petroleum Exporting Countries and its allies. Still, record production and rising inventories in the U.S., together with prospects for weaker global growth, are capping gains.

“The main drive of the upward momentum in oil prices finds its roots in the aggressive output cuts announced by the Saudi oil minister,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London. Also buoying prices is “the elephant in the room, which is Venezuela.”

Venezuelan exports are facing further disruption as the White House considers blocking foreign entities from dealing with the country’s state oil giant Petroleos de Venezuela SA. The move would be a possible next step as the U.S. seeks to choke off President Nicolas Maduro’s power.

West Texas Intermediate for March delivery rose 87 cents to $55.28 a barrel at 10:08 a.m. on the New York Mercantile Exchange. WTI has gained 4.9 percent this week.

Brent for April settlement climbed 92 cents to $65.49 a barrel, near the highest level since November, on the London-based ICE Futures Europe exchange. It has gained about 5 percent this week, and was at a $9.85 premium to WTI for the same month.

Saudi Arabian Oil Co.’s Safaniyah field has the capacity to pump 1.2 million to 1.5 million barrels of crude a day, and is a major component of the Arab Heavy grade. The cable was damaged in an accident about two weeks ago and repairs are expected to be completed by early March, people with knowledge of the matter said.

Other oil-market news:
  • American refiners, gasping for profits amid a glut of gasoline inventories, are hoping to find relief this spring when more drivers take to the roads.
  • OPEC and its allies may deepen production cuts at their next meeting as a global oil surplus proves harder to beat than expected, according to Rapidan Energy Group.
  • Sanctions on Iran and Venezuela are driving up prices of the world’s dirtier and heavier crudes.
  • The Cboe/Nymex Oil Volatility Index fell 2.9 percent in the week through Thursday, set for a seventh week of declines.

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