(Bloomberg) -- Oil futures gained on Monday as traders weighed conflicting reports on how quickly Saudi Arabia will be able to restore its lost production.
Futures rose 1% in New York. Saudi Arabia, which has reiterated it will bring back all lost output by the end of September following attacks on its oil facilities, is on course to fulfill the promise, according to Reuters. That comes after the Wall Street Journal over the weekend said repairs at damaged plants may take “many months.” Concerns over waning demand returned after a key European manufacturing index had its worst slump since the financial crisis.
Some analysts and consultants, including Rystad Energy and FGE, have said they are skeptical about the kingdom achieving its target. Bank of America analysts said that a delay to the return of Saudi oil output, among other factors, could push Brent above $70/bbl.
“People are going to be constantly looking for any signs that Saudi production is coming or going,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “Add to that the poor German PMI numbers and the trade situation.”
The market has been whipsawed by various data points and headlines even as geopolitical tensions mount in the Middle East. Iran's Foreign Minister Mohammad Javad Zarif refused to rule out war following plans for increased U.S. troops and weapons in Saudi Arabia, he said in an interview with CBS.
Manufacturing data from Germany and France fell far short of estimates, highlighting investors' fears over the fragility of the global market. Last week, a Chinese trade delegation canceled a planned visit to farms in the U.S. heartlands, stirring concerns about renewed hurdles in the U.S.-China trade negotiations.
See also: Saudi Aramco Reveals Scale of Damage From Oil Attacks
Brent crude for November rose 49 cents to settle at $64.77 a barrel on the ICE Futures Europe Exchange and traded at a $6.13 premium to West Texas Intermediate.
WTI for November delivery gained 55 cents to settle at $58.64 a barrel on the New York Mercantile Exchange, after climbing 5.9% last week.
The attacks set off an unprecedented flurry of activity in the oil futures markets last week, with both Brent and WTI contracts setting records in weekly aggregate volume with more than 17.2 million contracts traded.
Saudi Arabia has said Iran “unquestionably sponsored” the attacks. U.K. Prime Minister Boris Johnson said Monday that it was “plainly” clear the Islamic Republic was behind the strikes and said a new nuclear agreement needed to be negotiated, breaking ranks with European allies France and Germany, which are trying to preserve the 2015 agreement President Donald Trump withdrew from last year.
The attack knocked out about 5% of global supply and led to the biggest price spike on record. The U.S. on Friday slapped terror-related sanctions on Iran's central bank.
Iran's response has been a mix of defiance and an attempt to ease the tension. President Hassan Rouhani said on Sunday the Persian Gulf nation would lay out a peace initiative for the region at the United Nations General Assembly that would involve a coalition of regional and foreign countries, while Zarif said “I'm not confident that we can avoid a war.”
Read, The World's Oil Security Blanket Has Been Torched: Julian Lee
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--With assistance from Dan Murtaugh, Heesu Lee and Rakteem Katakey.
To contact the reporters on this story: Catherine Ngai in New York at cngai16@bloomberg.net;Robert Tuttle in Calgary at rtuttle@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Jessica Summers
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