Oil prices fell on Tuesday after Saudi Arabia pledged to play a "responsible role" in energy markets, although sentiment remained nervous in the run-up to U.S. sanctions against Iran's crude exports that start next month.
WTI hovered around $70 a barrel on Monday, as Saudi Arabia sought to reassure the market that the kingdom remains focused on raising output to compensate for supply losses elsewhere, such as Iran.
Saudi Arabia is ready to raise its output to 11 million barrels a day "in the near future" and has the ability to lift production as high as 12 million barrels a day if the market requires it, Al-Falih said.
"Oil prices are finely balanced in today's trading session despite the Saudi pledge to boost production".
Benchmark Brent crude oil futures rose 45 cents on the day to US$80.23 a barrel by 0900 GMT, while USA crude futures rose 31 cents to US$69.43 a barrel. Earlier in the day, WTI traded as low as $68.27, its lowest since September 14.
The discount of USA front-month futures below the second-month rose to 25 cents, its highest since November 2017.
The front-month contract was offered in Asia around the downward sloping (bearish) 5-day exponential moving average (EMAs) of $69.69 after Saudi Arabia pledged to play a "responsible role" in energy markets despite the increasing isolation over the killing of Saudi journalist Khashoggi.
Saudi credit default swaps, a form of insurance against a sovereign debt default, have shot up to near one-year highs over the past week, reflecting investor nervousness.
The United States warned Russian Federation on Sunday about assisting any potential Iranian attempts to evade an upcoming round of U.S. sanctions against the Islamic Republic, scheduled to take effect on November 4, months after U.S. President Donald Trump withdrew America from the 2015 nuclear deal.
Additionally, U.S. Treasury Secretary Steve Mnuchin, visiting Israel this week, said on Sunday that it will be hard for countries to receive waivers on Iran oil sanctions. "Then we'll have a clearer picture of what to expect for the first quarter of next year", Varga said.
However, an internal document reviewed by Reuters suggested OPEC is struggling to add barrels as an increase in Saudi supply was offset by declines elsewhere.
While Saudi Arabia is intent on making up for lost barrels, the outlook for demand next year is deteriorating.
OPEC estimates demand for its crude will fall to an average of 31.8 million bpd next year, from an average 32.8 million bpd this year.