Domestic oil futures surged on Monday despite weekend political disruptions in Saudi Arabia where some top officials and royal family members were detained, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, December West Texas Intermediate crude rose $1.71, or 3.1%, to settle at $57.35 a barrel, marking its sharpest daily gain in nearly one year.
January Brent crude, the global benchmark, gained $2.20, or 3.5%, to end trading at $64.27 a barrel on the London ICE Futures Exchange. For Brent crude, it was the biggest dollar gain in a single session since December 1, 2016.
Oil prices have trended upward, reaching levels unseen in two years as investors hope OPEC will extend its current production curb agreement through 2018. A new wrinkle in crude oil trading has been added to the mix with recent media reports detailing numerous arrests of Saudi Arabian princes, businessmen and government ministers in what has been billed as an anticorruption crackdown but seen by some as a power consolidation by Crown Prince Mohammad bin Salman.
“The risk spotlight has shifted to Saudi Arabia as Crown Prince Mohammed bin Salman works to consolidate power,” said Robbie Fraser, commodity analyst at Schneider Electric.
While developments in Saudi Arabia are unlikely to impact OPEC’s production curb agreement, a larger uncertainty is the succession plan for king-in-waiting Mohammad bin Salman. The crown prince, known popularly as “MBS,” was installed by King Salman less than five months ago — a move itself that came as a shock to some in the kingdom.
“We expect no immediate changes in oil policy. MBS seems strongly committed to anchoring the OPEC agreement deep into 2018 and moving ahead with the Aramco sale,” said Helima Croft.
Meanwhile, December natural gas surged 15 cents, or 5%, to finish trading at $3.134 per million British thermal units on the New York Mercantile Exchange.
