Oil futures: Crude steadies after Saudi comments, Brent around $78.50/b

Quantum Commodity Intelligence – Crude oil futures Tuesday were marginally higher after eventually finding support at lower levels in the wake of the three-day selloff following last Thursday's OPEC+ meeting.

Front-month Feb24 ICE Brent futures were trading at $78.45/b (1710 GMT), compared to Monday's settle of $78.03/b, while the Feb24/Mar24 spread remained at a narrow contango.  

At the same time Jan24 NYMEX WTI was trading $73.54/b versus Monday's settle of $73.04/b.

While the OPEC+ deal flagged a headline 2.2 million bpd of cuts in the first quarter, this included 1.3 million bpd of voluntary cuts from Saudi Arabia and Russia in place since July. Investors were also sceptical about the balance of the announced cuts, given the voluntary nature of the package of reductions.

"Crude oil extended losses: Crude oil prices extended losses for the third-straight trading day after OPEC+ failed to impress traders with promising output cuts," said CMC Markets analyst Tina Teng.

But comments from Saudi Arabia's energy minister that he expects the cuts to be fully implemented helped to calm markets, while adding that reductions could continue past Q1.

"I honestly believe that 2.2 million will overcome even the usual inventory build that usually happens in the first quarter. There are already signs that demand is improving," Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV.

Russia

This was followed up by Russia Deputy Prime Minister Alexander Novak, saying Russia intends to fully fulfill its obligations by January

However, traders face an anxious wait before reliable data is available on the proposed January cuts. 

Meanwhile, the market was left underwhelmed after the US government said it would take advantage of recent lower oil prices and step up the buying programme to replenish its Strategic Petroleum Reserve. However, it cautioned physical constraints will limit volumes.

David Turk, US deputy energy secretary, said logistical constraints could hamper plans to increase restocking beyond 3 million bpd.

"That is the physical limit of how much we can buy back," Turk said, but added, "We will be doing at least 3 million barrels (per month), and we hope we can bring more capacity online at these price levels," referencing the four caverns in Louisiana and Texas that the US uses for strategic reserves.