Crude futures strengthen on US dollar decline, despite Saudi stance

Crude futures closed higher Monday as a weaker US dollar led prices higher, despite concerns over excess supply after Saudi Arabia's oil minister said OPEC cannot be solely responsible for balancing the market.

NYMEX May crude rallied sharply in the last 15 minutes before the market's close, ending 88 cents higher at $47.45/barrel.

ICE May Brent settled 60 cents higher at $55.92/b, having also gained ground toward the end of the session.

The late-day surge could be attributed to "shorts scraping money," Tradition Energy senior analyst Gene McGillian said, referring to traders who purchased futures to exit bearish bets.

NYMEX refined products for April delivery were mixed. ULSD closed down 36 points at $1.7307/gal. RBOB settled 61 points lower at $1.8039/gal.

Crude futures rose at the start of US trading as the greenback weakened against other major currencies.

The US dollar index was down about 1% to 97.

Saudi Arabia's oil minister, Ali Naimi, said Sunday at an energy conference in Riyadh that OPEC cannot bear the burden of market management alone, repeating his call for cooperation from independent producers.

"Everyone must take part if we want to improve prices, and it is unallowable that one person earns at the expense of the other. In the [1980s], we lost a lot and we are not ready to repeat that," Naimi said.

Saudi Arabia has ramped up production to around 10 million b/d and is ready to meet increased customer demand "at any time," he said.

Riyadh told OPEC earlier this month Saudi production averaged 9.64 million b/d in February.

"Naimi was reiterating what's already been said, but it highlights the willingness of the Saudis to let prices stay low for a while, and they're still the kingpin," IAF Advisors research director Kyle Cooper said.

Fellow OPEC producer Libya is currently averaging 535,000 b/d, Mustafa Sanalla, the chairman of state-owned NOC, said Monday, up from the most recently reported level of close to 500,000 b/d.

Two rival governments are trying to control Libya's oil industry, while Sanalla said the oil company had no allegiance to either regime.

Through June, "Libyan output could easily swing by [500,000 b/d) either way and could increase volatility in the oil market," Barclays analysts said in a research note Monday, noting the country's political instability.

Negotiators from Iran and the US are set to arrive in Switzerland later this week to resume talks on a framework nuclear agreement between world powers and Iran before an end-of-month deadline.

The oil market views a potential agreement as bearish considering it could pave the way for additional exports from Tehran.

--Geoffrey Craig, geoffrey.craig@platts.com
--Adal Mirza, adal.mirza@platts.com
--Stuart Elliott, stuart.elliott@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com