(Bloomberg) — Oil rose above $100 after the Saudis refused to make any promises on future production increases, while a weaker dollar also helped put broader commodity markets on a firmer footing .
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West Texas Intermediate rose 5.1% to settle above $102 a barrel on Monday. Saudi ministers insisted at the end of President Joe Biden’s visit last week that decisions on oil policy will be dictated by market logic and the coalition agreement. Iraq’s oil minister told Bloomberg he sees oil trading above $100 by the end of the year.
The rally at the open this week was largely driven by a weaker U.S. dollar and higher equity markets, said Dennis Kiesler, senior vice president of trading at BOK Financial. “Saudi Arabia has given no sign of an immediate production increase coming, suggesting that last week’s selloff is likely overblown.”
Crude oil has tumbled since mid-June as fears of a potential recession ripped through commodity markets, eroding gains that followed Russia’s invasion of Ukraine. Regardless, Biden remains eager to get the Organization of the Petroleum Exporting Countries to add supplies to further lower prices and help quell inflation.
OPEC and its allies next meet on Aug. 3 after members agreed to revive crude supplies that had been halted during the coronavirus pandemic. Analysts at RBC see Saudi Arabia and a handful of other producers likely to make another modest increase in supply.
The kingdom is likely to “work out an arrangement to compensate members who consistently fail to meet their monthly production targets,” Helima Croft, chief commodities strategist at RBC Capital Markets, wrote in a report.
Elsewhere, Libya was in the process of restarting crude oil supplies. Prime Minister Abdul Hamid Dbeiba said the country’s exports were on track to fully resume after months of disruption as he justified his change of leadership at state oil company National Oil Corp.
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South Africa’s largest fuel producer has declared a force majeure on petroleum product supplies due to delays in crude oil deliveries to the Natref refinery it jointly owns.
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