Wednesday, July 17, 2024

Oil rises amid expectations OPEC+ production cuts will be extended

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Oil rises amid expectations OPEC+ production cuts will be extended

Oil prices rose on Monday, on rising expectations that the OPEC+ alliance will maintain its supply curbs and hopes that the Federal Reserve will end its cycle of interest rate hikes.

Saudi Arabia has been at the forefront of efforts to support prices, and announced major voluntary cuts in its oil production as part of a deal with the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance, which includes allies including Russia.

October is widely expected to voluntarily cut output by 1 million barrels per day for the fourth straight month.

The kingdom’s previous decisions to reduce its production came before the announcement of official selling prices, which are usually revealed in the first week of the month.

Russian Deputy Prime Minister Alexander Novak said Russia had agreed with its partners in the OPEC+ alliance on criteria for continuing to cut exports.

OANDA analyst Craig Erlam said Saudi Arabia and Russia could reverse the cuts at any time, “but I don’t think they’ll be in a rush to cut prices again.”

Brent crude for November delivery rose 45 cents to $89 a barrel, while US West Texas Intermediate crude futures for October delivery rose 40 cents to $85.95 a barrel.

Russell Hardy, CEO of Vitol, the world’s largest independent oil trader, said global crude oil supplies are expected to improve in the next six to eight weeks due to refinery maintenance, but supply of high-sulfur crude will remain limited.

A senior official at global commodity trading firm Trafigura said on Monday that the oil market is facing a risk of higher prices due to low inventories and lack of investment in new oil fields.

See also  Reuters poll: Rising oil prices support Gulf economies and concerns over inflation | Economy

US employment data in August reinforced expectations that the Federal Reserve would refrain from raising interest rates at its meeting on the 20th of this month.

Employment data on Friday showed a bigger-than-expected rise as nonfarm payrolls rose by 187,000 jobs last month, compared with expectations for a gain of 170,000 jobs.

But economists say a broader slowdown in the U.S. labor market, a slowdown in job growth, a decline in available jobs and a rise in the unemployment rate to 3.8% have reduced the chances of raising interest rates. Federal Reserve in the future.

Expectations of a contraction in oil supplies rose after Russian Deputy Prime Minister Alexander Novak reported on Thursday that Russia had agreed with partners in the Organization of the Petroleum Exporting Countries on criteria for continued export cuts. An official announcement about the planned cuts is expected this week.

China’s manufacturing activity unexpectedly expanded in August, with data from the Caixin Manufacturing Purchasing Managers’ Index leading to renewed optimism about the economic health of the world’s largest oil importer.

A series of economic support measures announced by Beijing last week supported energy prices, including cutting interest rates on deposits at some of the country’s largest state-owned banks and easing lending rules for homebuyers.

(Reuters, Al-Arabi Al-Jadeed)

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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