OIL: Saudi Crude Cut Expected to Extend: Bloomberg Survey

Saudi Arabia is expected to extend its 1mn bpd July production cut for at least another month according to a Bloomberg survey. The cut announcement has done little to lift crude prices against a backdrop of weak global demand, a slower return in Chinese demand than anticipated and strong volumes of sanctioned oil hitting the water.

• Some thoughts on the voluntary cut from respondents to the survey:
• “The current market weakness can be observed through the contango,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. “The Saudis must extend the cut.”
• “It would be too damaging to prices to remove it at this time, given the fragility of sentiment,” said Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC.
• “As Tehran silently increases its market share in China, Saudi Arabia has an Iran problem,” said Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd. “I expect them to roll over the million-barrel cut into August, but we might be nearing the limits of Saudi patience.”