Prices of oil futures surged Monday, continuing a rebound from the two-year lows reached last week, as Saudi Arabia reaffirmed that it would stick to its production quota if other members of OPEC did.
Trading was very active, analysts said, driven by speculation that the latest statement from the Saudis, the world’s largest oil exporter, would prove persuasive to other members of the Organization of Petroleum Exporting Countries and result in production cuts that could boost prices.
But the analysts said it was unclear whether the downward trend in oil prices had been broken or if the rise was a temporary adjustment.
On the New York Mercantile Exchange, the November contract for West Texas Intermediate crude climbed 66 cents to settle at $13.60 a barrel. At one point during the day, it traded as high as $13.80 a barrel.
Crude prices had tumbled to about $12.30 a barrel last week as Saudi Arabia threatened to produce more than its quota if the other 12 OPEC members continued to pump more than their quotas.
Saudi Arabia delivered its affirmation about its willingness to abide by its quota at the weekly Cabinet session presided over by King Fahd and reported by Information Minister Ali Hassan Shaer.
Nauman Barakat, vice president for energy investment at Prudential-Bache Securities, said the Saudis have made similar statements previously but that “this statement is being taken more seriously than before.”
He said one explanation is that a published report from the Mideast said Saudi Arabia had produced an average of 4.3 million barrels a day in the first week of October, matching its quota. He said the Saudis had been reported previously to be producing 5.7 million barrels a day.