Oil rises on supply cut pledges with slow return of Gulf field

Oil rises on supply cut pledges

Oil prices rose on Tuesday in thin pre-Christmas trading after Russia said cooperation with OPEC on supply cuts would continue.

Adding to signs Saudi Arabia and Kuwait could take a year to bring a major field back to full capacity.

Brent crude was up 30 cents, or 0.45%, at $66.69 a barrel by 1321 GMT. US West Texas Intermediate was 23 cents higher at $60.75 a barrel.

Cooperation between OPEC & Russia

OPEC and Russia goes on cooperation as long as it is “effective and brings results”, Russian energy minister said.

OPEC+ agreed in November to extend and deepen output curbs in place since 2017.

The reduction of output could see around 2.1 million bpd taken off the market, or about 2% of global demand.

Still, OPEC needs to do more to balance the market on a sustainable basis, Bjornar Tonhaugen said.

“The OPEC cuts didn’t fully solve the problem – instead they offer a light bandage to get through the first quarter of 2020,” said Tonhaugen.

Saudi Arabia-Kuwait neutral zone

A deal signed on Tuesday between Kuwait and Saudi Arabia on the Neutral Zone between the two countries could add to supply next year.

The agreement aims to end a five-year dispute between the OPEC members and reopen fields which can produce 0.5 million bpd or 0.5% of global supply.

According to US oil major Chevron, which helps operate the fields, said full production to be within 12 months.

While OPEC has been cutting production, US producers have been filling the gap, pumping ever greater amounts of crude to reach a record high of about 13 million bpd in November.

That has helped swell inventories with US stocks up about 1 percent this year.

Crude stocks almost, however, have fallen by about 1.8 million barrels last week, a second week of declines, according to a preliminary Reuters poll.

The weekly government report on inventories delayed by two days due to Christmas.

The report is normally released on Wednesday at 10:30 a.m. EST (1530 GMT).