The price of crude oil remains unchanged despite OPEC and supply cut anticipations. According to Reuters, oil prices were stable on Monday, amid expectations that major producers would keep supplies tight, as hopes grew for the Federal Reserve to leave interest rates unchanged to prevent dampening the US economy.
At 9:48 a.m. Saudi time, November Brent crude futures decreased three cents to $88.52 a barrel. Futures contracts for US West Texas Intermediate crude in October were unchanged at $85.55 per barrel.
Last week, both contracts reached their highest level in over half a year, following two weeks of losses.
Sugandha Sachdeva, executive vice president and chief strategist at Acme Investment Advisers, stated, “The anticipation of additional supply cuts from major oil-producing nations, Russia and Saudi Arabia, has been the primary driver of crude oil prices.”
According to Sachdeva, the consistent increase in U.S. oil production could prevent further significant price increases.
On Thursday, Russia’s Deputy Prime Minister Alexander Novak announced that the country had agreed with the Organization of the Petroleum Exporting Countries on the parameters for continued export cuts.
This week, an official announcement detailing the proposed cuts is anticipated.
Russia has already stated that it will reduce exports by an additional 300,000 barrels per day in September, following a reduction of 500,000 bpd in August. Additionally, Saudi Arabia is anticipated to extend a voluntary 1 million bpd reduction into October.
On Monday at the Asia Pacific Petroleum Conference in Singapore, Russell Hardy, the chief executive officer of Vitol, stated that the global crude market should become less tight in the next six to eight weeks due to refinery maintenance. Still, sour oil supplies with a higher sulfur content will remain closed.
“Due to OPEC+ (Organization of the Petroleum Exporting Countries and its allies) cuts, there is not enough supply (of sour crude) for all these complex refineries in India, Kuwait, Jazan, Oman, and China,” said Hardy.
In the United States, job growth accelerated in August. Still, the unemployment rate rose to 3.8%, and wage gains slowed, indicating that labor market conditions were cooling and bolstering expectations that the Federal Reserve will not further dampen the economy this month by raising interest rates.
Caixin’s manufacturing PMI survey revealed that China’s manufacturing activity unexpectedly increased in August, reducing some of the pessimism regarding the economic health of the world’s largest oil importer.
Prices have also been supported by Beijing’s economic support measures from the previous week, such as deposit rate decreases at some of the largest state-owned banks and a relaxation of borrowing rules for homebuyers.
However, investors continue to await more substantive measures to bolster the struggling property market, one of the most significant drags on the Chinese economy since the COVID-19 pandemic ended.