ibusinesslines.com July 17, 2018

Oil prices surge after Saudi Arabia's anti-corruption crackdown

10 November 2017, 02:52 | Justin Tyler

Oil prices surge after Saudi Arabia's anti-corruption crackdown

Oil prices surge after Saudi Arabia's anti-corruption crackdown

On Saturday, Saudi authorities detained 11 princes, four sitting ministers and a dozen of former ministers in a massive anti-corruption sweep.

Brent crude futures LCOc1 were down 51 cents, or 0.8 percent, at $63.76 a barrel by 12:32 p.m. (1732 GMT), having climbed 3.5 percent on Monday.

Saudi Crown Prince Mohammed bin Salman moved to shore up his power base with the arrest of royals, ministers and investors, which an official described as part of "phase one" of a crackdown.

Fueling the upturn are expectations that an end to a production cut by the Organization of Petroleum Exporting Countries (OPEC) may be postponed till the end of next year from March, according to some analysts.

The benchmark West Texas Intermediate (WTI) for December delivery hit a new yearly high of US$56.64 per barrel on Friday before rising 3 percent to finish at $57.35 on Monday.

Worldwide oil prices have been surging recently.

Traders said a rally that has pushed up Brent by more than 40 percent since July may have run its course.

OPEC will discuss output at a meeting on November 30, and is expected to extend the limits beyond their expiry in March 2018.

"The U.S. shale machine is poised to shift up a gear as producers make hay amid the improving price backdrop", Stephen Brennock, an analyst with London oil broker PVM, said in an emailed market report.

During the week ending on 3 November, total United States commercial crude inventories rose by 2.2m barrels (consensus: 2.9m) versus the prior week to reach 457.1m barrels, according to the Energy Information Administration.

US output expanded for a third week to 9.62 million barrels a day, the highest in weekly Energy Information Administration data going back to 1983. Last month, it expected a 680,000 bpd year-over-year increase to 9.92 million bpd. Crude inventories rose 2.24 million barrels last week, compared with a 2.45-million drop forecast in a Bloomberg survey.

"Higher prices are a definite factor in bringing production back on - this is a problem for OPEC", said Michael McCarthy, a chief strategist at CMC Markets in Sydney.

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