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Oil rallies in Asia as Saudi Aramco sees recovery in demand
[NEW YORK] Oil clawed back lost ground in Asia after Saudi Arabia's state-controlled producer said it expects energy demand to improve.
Futures in New York rose as much as 1.2 per cent, after declining 1.7 per cent on Friday. Saudi Aramco reported a 73 per cent drop in second-quarter profit after crude prices collapsed amid the global pandemic.
Oil consumption in Asia, Aramco's largest regional market, has almost returned to pre-coronavirus levels and the company's performance and demand for energy will probably improve over the rest of the year as nations ease coronavirus lockdowns, according to chief executive officer Amin Nasser.
US crude fell in tandem with equities on Friday on concerns over renewed tensions between the US and China and an uncertain outlook for further economic stimulus from Washington. US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi on Sunday signaled readiness to resume negotiations on pandemic relief without setting a date.
Crude tested the upper bound of its recent trading range last week, hitting five-month highs amid declines in US stockpiles. But the spotty recovery in oil consumption is restraining a potential breakthrough, with crude imports into China shrinking in July. Drillers cut exploration in US oil fields to a 15-year low as billions of barrels from old discoveries became worthless and explorers abandoned growth plans.
For the second time in three years, Saudi Arabia is slashing the volume of crude it is sending to America in an attempt to force down stockpiles in the world's most visible oil market and thereby hasten the rebalancing of supply and demand, Bloomberg oil strategist Julian Lee said.