Crude oil futures were higher during mid-morning trade in Asia Friday amid mild bargain hunting after an overnight fall, while data on Saudi Arabia’s crude production and exports also provided support. At 10:30 am Singapore time (0230 GMT), December ICE Brent crude futures were up 21 cents/b (0.26%) from Thursday’s settle at $79.50/b, while the NYMEX November light sweet crude contract was 17 cents/b (0.25%) higher at $68.85/b. The front-month ICE Brent Futures contract settled below $80/b for the first time in October Thursday, indicating a correction from its earlier four-year highs, analysts said. The overnight price fall stalled during the Asian morning session amid mild bargain hunting and supportive data on Saudi Arabia’s crude production.
Saudi Arabia raised its crude exports to 7.214 million b/d in August while continuing to draw down its stocks, latest data from the Joint Organizations Data Initiative showed. Refinery runs in OPEC’s largest producer rose 30,000 b/d to 2.798 million b/d in August, while direct crude burn for power generation fell 90,000 b/d to 490,000 b/d, the JODI data showed. Saudi crude production has since risen to about 10.7 million b/d and would go even higher in November, energy minister Khalid al-Falih has said in recent days, as the kingdom seeks to allay market fears of a supply squeeze when US sanctions on Iran snap back on November 5.
“The Saudi’s may increase output but that will effectively take away most of the globe’s spare production capacity. It’s easy to say you’re well supplied when the refinery runs are down from where they will be a month from now,” The PRICE Futures Group analyst Phil Flynn said in a note. “It [increased Saudi production] is not going to be enough to offset Iranian and Venezuelan supply losses,” he added. Market participants were continuing to monitor the rift between the US and Saudi Arabia over the disappearance of US-based Saudi dissident and writer Jamal Khashoggi. The US has signaled it may impose penalties on Saudi Arabia if it were to be found responsible, prompting the kingdom to respond with threats of “greater action”.