Crude resumed its march toward levels last seen in 2015 as escalating internal tensions in Saudi Arabia raised concerns about the stability of the world’s biggest crude exporter.
Futures rose as much as 1.3 percent in New York. Saudi Arabia’s elite scrambled to shift assets out of the region amid an expanding anti-corruption crackdown that’s ensnared dozens of royals and investors, according to six people with knowledge of the matter. Separately, the kingdom advised its nationals to leave Lebanon as a proxy conflict with Iran intensified. In the U.S., stored crude supplies dropped by more than 1 million barrels at a key pipeline hub.
“If there is the potential for any supply disruption, it’s a big deal,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone.
The Saudi anti-graft sweep that began on Nov. 4 threatens to overshadow a Nov. 30 Organization of Petroleum Exporting Countries’ gathering at which an extension of production limits is expected to take center stage. Goldman Sachs Group Inc. said that a non-committal outcome from the meeting combined with accelerating drilling activity in the U.S. could push prices lower. Conversely, additional escalation of recent geopolitical tensions could lead to another large rally, the New York bank’s analysts said.
“Who wants to be short with everything that’s bubbling in the Middle East, even though nothing has happened in Saudi this week to directly affect oil supply,” Michael Hiley, head of over-the-counter energy trading at New York-based LPS Partners, said.
The Saudis plan to curb December exports by 120,000 barrels a day from November levels, an Energy Ministry spokesman said on Thursday. Shipments to the U.S. will fall by 10 percent on a month-to-month basis, he said.
West Texas Intermediate for December delivery climbed 40 cents to $57.21 a barrel at 10:16 a.m. on the New York Mercantile Exchange. Prices have climbed almost 6 percent so far this month.
Brent for January settlement edged higher by 35 cents to $63.84 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $6.35 to January WTI.
In a sign that the worldwide glut is shrinking, Genscape Inc. data showed crude stockpiles at the Cushing, Oklahoma, pipeline hub fell by 1.1 million barrels in the week ended Nov. 7, according to a person familiar with the data.