Prices of Crude Oil Rise on OPEC+ Output Cuts
Prices of crude oil rose on Friday over expectations that the Organisation of Petroleum Exporting Countries and allies (OPEC+) producers would extend output cuts until the end of the year.
Crude oil prices have been trading firm this morning after Russia confirmed that it will extend export curbs, ING said in an update, although the details are still not available.
International benchmark Brent crude traded at $87.11 per barrel, representing a 0.32% rise from the closing price on Thursday of $86.83 per barrel. The American benchmark West Texas Intermediate (WTI) traded at the same time at $83.93 per barrel, up 0.36% from the session close of $83.63 per barrel.
Tight global supply concerns following the news that Russia agreed on further OPEC+ cuts underpinned price increases. Russia agreed on further curbs on its oil exports with OPEC+ partners, Russian Deputy Prime Minister Alexander Novak said, according to Russian media.
The detail of the plan is expected to be announced next week. Russia’s statement comes amid market expectations for Saudi Arabia to extend its 1 million barrel per day (bpd) oil supply cut by one month into October.
Earlier this month, Saudi Arabia stated that it would extend its existing output cutbacks of 1 bpd through September. The country originally reduced output in July and extended it through August.
Likewise, Russia said it would reduce exports by 500,000 bpd in August and cut 300,000 bpd in September.
Oil markets are also focused on clues about the world’s largest oil consumer, the US interest rate policy for the remainder of the year and signals of economic activity from China, the world’s largest crude oil importer.
US natural gas inventory continue to increase at a strong pace providing some comfort to the market on natural gas supplies, even as uncertainty about Australian LNG continues
Brent prices traded firm yesterday and continued the gains this morning after Russia announced an extension of export curbs. Russia’s Deputy Prime Minister Alexander Novak said in a televised meeting that the country has agreed to extend the export curbs, although the details haven’t been provided yet.
Russia made a voluntary cut to its oil exports of around 500Mbbls/d for August and 300Mbbls/d for September. Saudi is also likely to extend the voluntary production cuts of around 1MMbbls/d for October as demand concerns remain.
China has issued an export quota of around 12m tonnes for clean refined products including gasoline, jet fuel and diesel in its third quota release for the year. Beijing has so far issued an export quota of around 40m tonnes for clean products in 2023 compared to around 37.25m tonnes of export quota allocated for the full year 2022.
Slow domestic demand and a ramp-up in refining capacity have been creating a surplus of products in the Chinese market and a higher quota is aimed at reducing this surplus.
Finally, the Energy Information Administration in the US reported that natural gas inventory in the country increased by 32Bcf over the last week taking total inventory to 3,115Bcf as of 25 August.
US inventory of natural gas is higher by around 484Bcf compared to year-ago levels and around 249Bcf higher than the five-year average for this point in the season. #Prices of Crude Oil Rise on OPEC+ Output Cuts