Oil rose more than a dollar a barrel on Friday after top producers Saudi Arabia and Russia extended supply cuts until September, raising concerns about insufficient supply.WTI crude rose 20% in the past six weeks and Brent rose 17%.
Brent crude futures rose $1.10, or 1.3%, to $86.24 a barrel, while West Texas Intermediate crude (WTI) rose $1.27, or 1.6%, to $82.82 a barrel. Both benchmarks hit their highest levels since mid-April on Friday.
Saudi Arabia on Thursday extended its voluntary oil production cut of 1 million barrels per day until the end of September, keeping the door open for another extension. Russia preferred to reduce its oil exports by 300,000 barrels per day next month.
With the extension of the production cut, a market shortfall of more than 1.5 million bpd is projected in September, after an estimated gap of around 2 million bpd in July and August.
On the demand front, after the OPEC+ group’s inter-ministerial panel meeting on Friday, Russian Deputy Prime Minister Alexander Novak said global oil consumption could increase by 2.4 million barrels per day this year.
The meeting did not bring any change in output policy. It was noted that the panel could take additional measures at any time, which could mean additional cuts if market conditions deteriorate.
There are those who expect Brent prices to trade in the range of $85 to $90 per barrel in the coming months.
Earlier on Wednesday, the U.S. Energy Information Administration (EIA) reported that the country’s crude oil stocks fell by a record 17 million barrels last week, as exports and refineries’ crude oil inputs surged amid the summer travel season.
Data released on Friday, which depressed oil prices, showed the US economy continued moderate employment growth in July, but solid wage gains and a drop in the unemployment rate signaled continued tightness in labor market conditions.
Additionally, the decline in eurozone business activity worsened more than originally thought in July, with the Bank of England raising interest rates to a 15-year high on Thursday.
