Oil Market Rises as Saudi, Russia Extend Supply Cuts

By Adedapo Adesanya

The oil market rose on Monday as top exporters Saudi Arabia and Russia reaffirmed their commitment to extra voluntary oil supply cuts until the end of the year.

Brent crude futures gained 47 cents or 0.55 per cent to trade at $84.71 a barrel and the US West Texas Intermediate crude was up by 37 cents or 0.46 per cent to $80.45 a barrel.

Saudi Arabia confirmed on Sunday it would continue its additional voluntary cut of 1 million barrels per day in December to keep output around 9 million barrels per day.

Russia also announced it would continue its additional voluntary cut of 300,000 barrels per day from its crude oil and petroleum product exports until the end of December.

Analysts noted that the cuts could be extended into the first quarter of 2024 because of 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.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+) has been cutting output since last year in what it says is preemptive action to maintain market stability.

Saudi Arabia, OPEC’s de-facto leader, first made the voluntary cut for July as an addition to a broad supply-limiting deal first agreed by some members of OPEC+ in April.

The kingdom said in September it would extend its additional voluntary cut until the end of the year, and review the decision monthly.

The market also continued to monitor the development in the Middle East as the United Nations demanded a humanitarian ceasefire on Monday, a month into the war in Gaza, as health authorities in the enclave said the death toll from Israeli strikes now exceeded 10,000.

Support also came from the weakening Dollar as the Dollar index fell as low as 104.84, the weakest since September 20. A weaker greenback boosts demand for crude purchases by holders of foreign currency.

Investors will be watching for further economic data from China on Tuesday following weak October factory data last week.

Macroeconomic concerns persist in Europe, where Purchasing Managers’ Index (PMI) data showed the downturn in euro zone business activity accelerated in October as demand weakened further.