Oil rose for a second day as a drone attack on a Saudi Arabian oil field revived concerns that the tense Middle East political situation may jeopardise crude exports.
Futures in New York advanced 0.6 percent to trade near $55 a barrel. Yemeni rebels attacked oil and gas facilities at the Shaybah field in the southeast part of the kingdom over the weekend, although there was only a small fire and no disruption to production, Saudi Arabian Oil Co. said in a statement. Prices were also supported as President Donald Trump said the US is talking with China on trade, but suggested he wasn’t ready to sign a deal yet.
“Though oil production there has not been affected, this nonetheless puts the spotlight once again on the supply risks in the Middle East,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report.
Crude has fallen around 17 percent from a peak in late April as the US-China trade war intensified, casting a pall over an already-weak outlook for global growth. While a series of attacks on tankers and energy facilities in Middle East have provided some temporary support to prices, oversupply remains the key concern for the market.
West Texas Intermediate crude for September delivery rose 31 cents, or 0.6 percent, to $55.18 a barrel on New York Mercantile Exchange. Earlier it climbed 1.7 percent. The contract, which will expire on Tuesday, advanced 0.7 percent last week.
Brent for October settlement increased 33 cents, or 0.6 percent, to $598.97 a barrel on the ICE Futures Europe Exchange. The global benchmark is trading at a premium of $3.83 a barrel to WTI, near the smallest gap since March 2018.
The remote Shaybah oil field produces around 1 million barrels a day, just under 10 percent of Aramco’s total production capacity, including some of the highest-quality crude from the kingdom.
Recent phone calls between US and Chinese trade negotiators had been “positive” and more teleconference meetings are planned over the next week to 10 days, White House economic director Larry Kudlow said Sunday. However, President Trump linked the discussions to demonstrations in Hong Kong, saying for the first time on camera that it would be harder to reach
a deal if there’s a violent conclusion to the protests.