Oil Advances as Intensifying Saudi Crackdown Spurs InstabilityBy
World’s biggest crude exporter convulsed by anti-graft arrests
A non-committal OPEC meeting may lead to price drop: Goldman
Crude resumed its rally as escalating tensions in Saudi Arabia and throughout the Mideast raised concerns about stability in the oil-rich region.
Futures edged higher by 0.6 percent in New York. Saudi Arabia’s elite were said to be scrambling to shift assets out of the region amid an expanding anti-corruption crackdown that’s ensnared dozens of royals and investors. Separately, the kingdom advised its nationals to leave Lebanon, which is in the cross hairs of intensifying tension between Saudi Arabia and Iran.
At the same time, stored crude supplies at a key U.S. pipeline hub dropped by more than 1 million barrels, giving further impetus to rising prices.
“The news out of Saudi Arabia has really added to that bullish bias to prices,” Rob Haworth, who helps oversee $150 billion in assets at U.S. Bank Wealth Management in Seattle, said by telephone. “You’ve got speculators who have been continuing to push their bullish position and that news flow -- fear of conflict with Iran, Saudi Arabia, the Yemen issue -- continues to underscore this market.”
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 Futures, 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 36 cents to settle at $57.17 a barrel on the New York Mercantile Exchange. Prices have climbed more than 5 percent so far this month.
Brent for January settlement edged higher by 44 cents to end the session at $63.93 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $6.54 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.
- OPEC shipments will climb to 24.13 million barrels a day in the four weeks to Nov. 25 compared with the period that ended Oct. 28, tanker-tracker Oil Movements said in a weekly report.
- Noble Group Ltd.’s bonds tumbled as the embattled commodity trader reported further losses and a sharp decline in liquidity, adding to pressure as it limps toward what analysts say is an all-but inevitable debt restructuring.
- The soaring diesel market has taken a turn for the worse. That could be bad news for oil bulls who amassed record bets on a rally in crude.
— With assistance by Ben Sharples, and Grant Smith