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Oil Rises After Drone Attack on Saudi Arabia Disrupts Gulf Calm

By Bloomberg 19 August 2019
Caption
Signs for kerosene and crude oil sit on pipes used for landing and unloading crude and refined oil at the North Pier Terminal, operated by Saudi Aramco, in Ras Tanura, Saudi Arabia, on Monday, Oct. 1, 2018. Saudi Aramco aims to become a global refiner and chemical maker, seeking to profit from parts of the oil industry where demand is growing the fastest while also underpinning the kingdom’s economic diversification. Photographer: Simon Dawson/Bloomberg

Oil rose for a second day after a drone attack on a Saudi Arabian oil field brought geopolitical risks back into focus, and as more planned U.S.-China trade meetings spurred some investor optimism.

Oil futures in New York rose as much as 1% after climbing 0.7% on Friday to cap the first weekly gain in three. Yemeni rebels attacked oil and gas facilities at 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 Aramco said in a statement. President Donald Trump said the U.S. is talking with China on trade but suggested he wasn’t ready to sign a deal yet.

Oil rises after Saudi field is hit by drone attack

Crude has fallen around 17% from a peak in late April as the U.S.-China trade war intensified, casting a pall over the global growth outlook. While a series of attacks on tankers and energy facilities in the Middle East have provided some temporary support to prices, oversupply remains the key concern for the market. Meanwhile, there are signs Saudi Arabia is struggling to muster support for its bid to convince OPEC and its allies to cut production further.

See also: Saudi Arabia Makes a Promise That It Just Can’t Keep: Julian Lee

The attack in Saudi Arabia is “keeping markets firm,” said Michael McCarthy, chief markets strategist at CMC Markets Asia Pacific Pty in Sydney. The apparent easing of tensions between the U.S. and China is also helping, he said.

West Texas Intermediate crude for September delivery rose 43 cents to $55.30 a barrel on New York Mercantile Exchange as of 10:04 a.m. in Singapore after climbing as much as 55 cents earlier. The contract, which will expire on Tuesday, advanced 0.7% last week.

Brent for October settlement increased 49 cents to $59.13 per barrel on the ICE Futures Europe Exchange. The global benchmark is trading at a premium of $3.86 a barrel to WTI, near the smallest gap since March 2018.

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