Global oil prices extended gains for a third consecutive session Today, pulling U.S. crude out of bear market territory, amid suggestions from Saudi Arabia’s powerful energy minister that both OPEC and Russia are prepared to extend production cuts well into the second half of the year.
Speaking at an investment forum in St. Petersburg, Saudi Energy Minister Khalid al-Falih said he was ‘aligned’ with Russia on oil market views and noted the Kingdom was producing crude at a rate that is around 700,000 barrels per day below its target. He also said prices in the range of $60 per barrel wouldn’t induce investment, adding it was foolish to boost production to compensate for the recent market declines. Brent crude contracts for August delivery, the new global benchmark, were seen $1.12 higher from from their Thursday close in New York and changing hands at $62.79 per barrel following al-Falihs’ remarks in St. Petersburg, while WTI contracts for the July were marked 94 cents higher at $53.49 per barrel. Al-Falih’s comments followed remarks from Russian President Vladimir Putin yesterday which echoed the Kingdom’s concern for falling prices and weakening demand, but pegged a $40 per barrel target as one that would allow his country’s budget, which is heavily reliant on oil revenues, to balance. That’s more than half of the $80 to $85 per barrel price the International Monetary Fund says is need to keep Saudi Arabia’s books in line.