Crude broadly steady as Saudi Arabia reassures market

Crude oil futures were edging between gains and losses on Friday morning in Europe, as the market searched for direction amid comments from Saudi Arabia that the producer will not flood the market with oil as production cuts ease and the end of the Norwegian oil field workers strike.

At 1055 GMT , the September ICE Brent crude futures contract was down 2 cents from Thursday’s settle at $72.53/b, while the NYMEX WTI August contract was up 8 cents at $69.54/b, while weakening throughout the morning. Meanwhile the US dollar was down 0.11%.

The gains followed a statement from Saudi Arabia’s energy ministry, in which the country’s OPEC governor, Adeeb al-Aama, said it has no plans to oversupply the market, even as the OPEC and non-OPEC production deal unwinds.

Saudi Arabia only exports barrels that are earmarked to match confirmed lifting requests by end-users, and does not try to push oil into the market beyond its customers’ needs,” the statement said. “Just as Saudi Arabia would not like to see unmet customer demand, an oversupplied market repels potential investment in the oil industry, curtailing future supply and contributing to volatility.”

“It was not long ago that the Saudis said they would make sure that there is adequate oil supply in the market, and now they are trying to reassure those who think they could oversupply the market,” ING analysts said in a morning note.

On Friday, that was weighing against the end of a strike on Norwegian offshore oil fields, which threatened output in the North Sea. On Thursday, the 10-day Norwegian strike — which had shut down the Shell-operated Knarr field — was resolved after the union spearheading the strike said it had reached a pay deal with their employer, the Norwegian Shipowners Association.

Friday concludes a bumpy week for oil markets, as bearish and bullish sentiment squared off, and the long-term direction for output remained uncertain.

Expectations of a dramatic influx of product from Saudi Arabia and Russia has been one of the main bearish drivers of crude prices this week, alongside what continues to be robust gains in US supply.

That had largely managed to offset a range of supply threats across the market, including the Norwegian strike and unstable Libyan supply, but the market was still left weighing the long-term risks of falling Venezuelan output, and how far the ripple effects of the US’ sanctions on Iran will reach.

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The underlying mood is uneasy,” said Stephen Brennock, an analyst at PVM, said in a morning note. “Price stability is in short supply and wild swings will be the norm so long as the supply backdrop remains clouded by uncertainty.”