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Oil surged after the death of King Abdullah
of Saudi Arabia, the biggest producer in the Organization of
Petroleum Exporting Countries.
Futures rose as much as 3.1 percent in New York after the Saudi Press Agency announced the death, citing a statement from the royal court. Crown Prince Salman bin Abdulaziz will succeed as king, according to state television. Saudi Arabia led OPEC’s decision to maintain its oil-production quota at a November meeting, exacerbating a global glut that’s driven prices lower.
“The market is reacting bullishly to this news because it may usher in a period of uncertainty as far as Saudi policies going forward as new leadership takes over,” said Andy Lipow, the president of Lipow Oil Associates LLC, an energy consultant in Houston, Texas.
West Texas Intermediate for March delivery gained as much as $1.45 to $47.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $47.30 at 11:30 a.m. Sydney time. The contract dropped $1.47 to $46.31 on Thursday. The volume of all futures traded was about 31 percent above the 100-day average. Prices are down 2.9 percent this week.
Oil fell almost 50 percent last year as the U.S. pumped at the fastest rate in more than three decades and OPEC resisted calls to cut output. Crude inventories in the U.S., the world’s largest oil consumer, climbed by 10.1 million barrels through Jan. 16, the Energy Information Administration reported Thursday. That was the biggest volume increase since March 2001.
“Any form of economic instability after the death of the king will create a little bit of uncertainty,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The market is exceptionally short, so even if there is a bit of a slight err, you could see a rally of some substance.”
OPEC’s 12 members, which supply about 40 percent of the world’s oil, maintained their collective production target at 30 million barrels a day at a Nov. 27 meeting in Vienna. Output averaged 30.2 million in December, data compiled by Bloomberg show. Saudi Arabia pumped 9.5 million a day last month.
Brent for March settlement fell 51 cents, or 1 percent, to $48.52 a barrel on the London-based ICE Futures Europe exchange on Jan. 22.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Jessica Summers in New York at jsummers24@bloomberg.net
To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Aaron Clark, Yee Kai Pin
Futures rose as much as 3.1 percent in New York after the Saudi Press Agency announced the death, citing a statement from the royal court. Crown Prince Salman bin Abdulaziz will succeed as king, according to state television. Saudi Arabia led OPEC’s decision to maintain its oil-production quota at a November meeting, exacerbating a global glut that’s driven prices lower.
“The market is reacting bullishly to this news because it may usher in a period of uncertainty as far as Saudi policies going forward as new leadership takes over,” said Andy Lipow, the president of Lipow Oil Associates LLC, an energy consultant in Houston, Texas.
West Texas Intermediate for March delivery gained as much as $1.45 to $47.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $47.30 at 11:30 a.m. Sydney time. The contract dropped $1.47 to $46.31 on Thursday. The volume of all futures traded was about 31 percent above the 100-day average. Prices are down 2.9 percent this week.
Oil fell almost 50 percent last year as the U.S. pumped at the fastest rate in more than three decades and OPEC resisted calls to cut output. Crude inventories in the U.S., the world’s largest oil consumer, climbed by 10.1 million barrels through Jan. 16, the Energy Information Administration reported Thursday. That was the biggest volume increase since March 2001.
Uncertainty
King Abdullah oversaw a fivefold increase in the size of the Arab world’s biggest economy and met the Arab Spring with a mixture of force and largesse. He died after almost a decade on the throne. He was born in 1924.“Any form of economic instability after the death of the king will create a little bit of uncertainty,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The market is exceptionally short, so even if there is a bit of a slight err, you could see a rally of some substance.”
OPEC’s 12 members, which supply about 40 percent of the world’s oil, maintained their collective production target at 30 million barrels a day at a Nov. 27 meeting in Vienna. Output averaged 30.2 million in December, data compiled by Bloomberg show. Saudi Arabia pumped 9.5 million a day last month.
Brent for March settlement fell 51 cents, or 1 percent, to $48.52 a barrel on the London-based ICE Futures Europe exchange on Jan. 22.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Jessica Summers in New York at jsummers24@bloomberg.net
To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Aaron Clark, Yee Kai Pin
