Oil prices rose sharply on Monday, buoyed by speculation that Saudi Arabia is planning to curb petrol exports in a further attempt to balance the market. The OPEC kingpin is looking to bring crude back toward $80 a barrel to have any semblance of a balanced budget this year.
U.S. crude extended its recovery to five days on Monday, with the West Texas Intermediate (WTI) benchmark reaching a high of $49.79 a barrel on the New York Mercantile Exchange. The U.S. futures contract was last seen trading at $49.26 a barrel, up $1.30, or 2.7%.
Brent crude, the international futures benchmark, notched a session high of $58.93 a barrel for its sixth consecutive gain. It was last seen hovering at $57.99 a barrel, having gained 93 cents, or 1.6%.
Commodity markets were aided by a sharp drop in the U.S. dollar at the start of the week. The U.S. dollar index (DXY) fell 0.5% to 95.72.
Saudis Keen on $80 a Barrel Oil
Saudi Arabia is planning to reduce oil exports to 7.1 million barrels per day in January as part of a broad effort to rebalance the market, The Wall Street Journal reported Monday. That represents a cut of 800,000 barrels per day from November levels. These efforts go hand-in-hand with a decision by OPEC+ to reduce production by 1.2 million barrels per day.
The Saudis would like to bring crude prices back to $80 a barrel, the level identified in its 2019 budget, to cover a surge in government spending. Riyadh plans to increase government spending 7% this year. Astonishingly, the budget blueprint assumes a 9% increase in revenue despite massively drop in oil prices in the fourth quarter.