By Adedapo Adesanya
The oil market improved on Thursday, rising for a third month in a row on expectations that cuts by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) led by Saudi Arabia would continue through the end of 2023.
Brent was up during the last trading session of August by $1 or 1.2 per cent to $86.86 a barrel, and the US West Texas Intermediate appreciated by $2 or 2.5 per cent to $83.63 a barrel.
Analysts expect Saudi Arabia to extend a voluntary oil production cut of 1 million barrels per day into October, adding to cuts put in place by OPEC+.
The OPEC leader will likely roll over a voluntary oil cut of 1 million barrels per day for a third consecutive month into October amid uncertainty about supplies and as the kingdom targets drawing down global inventories further.
The broader OPEC+ group agreed to a broad deal in early June to curtail supplies until the end of 2024. Saudi Arabia at the time announced the additional voluntary cut, which brought its oil production to a multi-year low of 9 million barrels per day.
Support also came as Mr Eric Rosengren, the former president of the Boston Federal Reserve, said the US central bank can end its cycle of rate increases if the labour market and economic growth continue to slow at the current gradual pace.
On the supply side, the latest government data showed US crude oil production rose 1.6 per cent in June to 12.844 million barrels per dat, its highest since February 2020, before the COVID-19 pandemic destroyed demand for fuel and other oil products.
Adding to tight supply expectations, however, US crude inventories fell by a larger-than-expected 10.6 million barrels last week, depleted by high exports and refinery runs, government data from the Energy Information Administration (EIA) on Wednesday showed.
Pressure came as weak Chinese factory data limited further gains, bringing back a focus on the country and the US.
China’s manufacturing activity shrank again in August, an official factory survey showed, fuelling concerns about weakness in the world’s second-biggest economy.
China’s official purchasing managers’ index (PMI) rose to 49.7 from 49.3 in July, the National Bureau of Statistics said, but it remained below the 50-point level. A reading above 50 points represents an expansion from the previous month.
On Wednesday, The US government revised its gross domestic product growth for the second quarter to 2.1 per cent, from the 2.4 per cent pace reported last month, and data released separately showed private payroll growth slowed significantly in August.
Dipo Olowookere