Oil records gains for the sixth week with shrinking global supply

2023-08-05 06:18:00

Oil prices

Prices reached during the session their highest level since mid-April

Dubai – Al Arabiya.net

Posted on: August 05, 2023: 10:18 AM GST Last updated: August 05, 2023: 10:47 AM GST

Oil prices rose at the settlement by more than a dollar a barrel in the Friday session, to continue achieving gains for the sixth week in a row, after Saudi Arabia and Russia decided to cut supplies until the end of next month, which increased fears of a supply shortage.

Brent crude futures rose $1.10, or 1.3%, to settle at $86.24 a barrel, while US West Texas Intermediate crude rose $1.27, or 1.6%, to settle at $82.82 a barrel.

During the session, the two benchmarks achieved their highest level since mid-April, according to Archyde.com.

Saudi Arabia said in a statement on Thursday that it would extend a voluntary cut in its oil production by one million barrels per day until the end of September, and left the door open for another extension. Russia also decided to reduce its oil exports by 300,000 barrels per day next month.

“With the extension of production cuts, we expect a market deficit of more than 1.5 million barrels per day in September, after an estimated deficit of two million barrels per day in July and August,” UBS analysts wrote in a note.

On the demand side, Russian Deputy Prime Minister Alexander Novak said, after a meeting of the Joint Ministerial Monitoring Committee of OPEC +, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, that global oil consumption may grow by 2.4 million barrels per day this year.

The committee meeting did not witness any changes to the production policy. The memo issued by “UBS” added that the committee indicated that it may take additional measures at any time, which may mean additional cuts if market conditions worsen.

Oil prices were affected by the data released on Friday, which showed that the US economy maintained a moderate pace of job growth in July, but the strong rise in wages and the decline in the unemployment rate to 3.5% reflected the continued strength of the labor market.

In addition, business activities in the Eurozone fell more than initially thought in July, and the Bank of England raised interest rates to a 15-year high last weekend.