(Bloomberg) — Oil gained after Saudi Arabia and Russia reaffirmed they will stick with oil supply curbs of more than 1 million barrels a day through the end of the year. West Texas Intermediate crude increased more than 2% to trade above $82 a barrel.
Source: Reuters
The announcement by the OPEC+ heavyweights on Sunday came after concerns about weaker global demand pushed oil prices down by almost 6% last week.
Crude is trading at prices seen before the Israel-Hamas war began as the fighting fails to disrupt output from the Middle East, the source of about a third of the world’s oil.
While the conflict still could spread, the Organization of Petroleum Exporting Countries and its partners are keeping tight control over supplies amid a shaky demand outlook, underscored by a surprise contraction in Chinese manufacturing last month. Saudi Arabia has slashed daily production by 1 million barrels, and Moscow is curbing exports by 300,000 barrels, on top of earlier cuts made with fellow OPEC+ nations.
“We believe these voluntary supply cuts are likely to be extended into the first quarter of 2024 — given seasonally weaker oil demand at the start of every year, ongoing economic growth concerns, and the aim of producers and OPEC+ to support the oil market’s stability and balance,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Saudi Aramco, meanwhile, kept its December official selling prices for two of five oil grades unchanged to Asian customers. However, the kingdom slashed its prices for Europe, a further sign of the concern over consumption in the region.
In a bearish signal, more traders are paying a higher premium for contracts that profit from a price decline rather than a rally. The gauge known as the put skew widened to levels last seen in mid-October. Hedge funds also slashed bullish bets on US crude by the most since July 2021.
