(Bloomberg) -- Crude posted its biggest gain in almost two months as the world’s largest oil exporters prepare to discuss global supplies.
Futures rose 2.4 percent in New York on Monday after registering the worst weekly swoon in more than 2 1/2 years. All eyes are on this week’s G20 gathering in Argentina that will include Saudi Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin. That event will be followed by a key OPEC meeting next week in Vienna.
“There has been sufficient commentary out of various OPEC members about addressing this oversupply situation, either at the G20 or at the upcoming OPEC meeting,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC.
The U.S. benchmark crude has dropped more than 20 percent this month amid larger-than-expected exports of Iranian oil and record American output. Meanwhile, Saudi Arabia is pumping more crude than at any time since its first barrel was extracted 80 years ago amid pressure from U.S. President Donald Trump.
Russia has signaled “they aren’t excited about doing a cut. If Saudi decides to do a cut, it’s really going to be giving up market share to the United States,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC. “This week is going to be volatile with Saudi Arabia and Russia going to the G20.”
Yet, Ecuador has expressed support to an OPEC production cut at the upcoming meeting. And Goldman Sachs Group Inc (NYSE:GS). describes the current situation as unsustainable and touted the G20 meeting in Buenos Aires as a potential turning point. Goldman also said commodities offer an extremely attractive entry point for longs in oil.
West Texas Intermediate for January advanced $1.21 to settle at $51.63 a barrel on the New York Mercantile Exchange. The contract plummeted almost 11 percent last week.
Technical indicators followed by chart-watching traders showed the U.S. benchmark crude deep in oversold territory, signaling a bounce back was in store.
The global benchmark traded at an $8.85 premium to WTI, the widest level since the middle of last week.
Trump, who’s made opposition to OPEC a recurring theme, continued to comment on Twitter about the benefits of cheaper crude. He thanked Saudi Arabia last week for lower oil prices.
The G20 meeting will have an impact on OPEC’s deliberations, according to Citigroup Inc (NYSE:C). “It’s indeterminate at this moment on where oil prices will be going,” Citigroup’s global head of commodity strategy Ed Morse said in a Nov. 23 video presentation.
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