Saudi Arabia and Russia have indicated they are prepared to pause or reverse output agreements
07 June 2024 - 08:04
byBrijesh Patel
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Singapore — Oil prices ticked higher on Friday, as reassurances from Opec+ members Saudi Arabia and Russia indicating readiness to pause or reverse output agreements, but markets were headed for their third consecutive weekly losses.
Brent crude futures rose 2c to $79.89 a barrel and US West Texas Intermediate (WTI) crude futures rose 4c to $75.59 by 3.18am GMT.
“Oil prices managed to regain some ground over the past few days, tapping on some reassurances from Opec+ around their latest supply decision,” said Yeap Jun Rong, market strategist at IG.
“We may expect oil prices to hover around the $76-$80 level, as sentiments attempt to stabilise while awaiting cues for the next step.”
Prices rallied on Thursday when Saudi Arabia and Russia tried to reassure markets on supply agreements. But they are set for a third consecutive week of declines after analysts saw Sunday’s Opec+ meeting as indicating rising supply which is bearish for prices.
Oil cartel Opec and allies including Russia agreed to extend most production cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually.
Saudi energy minister Prince Abdulaziz bin Salman said on Thursday Opec+ could pause or reverse voluntary output increases if it decided the market is not strong enough.
“We are ready to react quickly to market uncertainties,” Novak said at the event, adding the price drop after the weekend meeting was caused by misinterpretation of the agreement and “speculative factors”.
Jarand Rystad, founder and CEO of Rystad Energy consultancy, told Reuters that Opec+ would probably persist in managing the market but “further cuts may be necessary as demand softens slightly while the supply remains sufficient unless adjustments are made”.
“The sweet spot for Opec+ lies within the price range we’ve witnessed — low 80s to high 70s [in dollars a barrel]. Despite some Russian volumes being cut from the market due to sanctions and drone attacks, the impact remains manageable.”
The European Central Bank (ECB) went ahead with its first interest rate cut since 2019 on Thursday, prompting analyst expectations of the US Federal Reserve following the suit. Lower rates boost oil demand.
US nonfarm payrolls data for May, due at 12.30pm GMT on Friday, could shed more light on the timing of the Fed’s rate cuts in 2024.
China, the world’s biggest crude importer, imported 46.97-million metric tonnes of crude oil in May, official data from customs showed on Friday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil inches higher on Opec+ output reassurances
Saudi Arabia and Russia have indicated they are prepared to pause or reverse output agreements
Singapore — Oil prices ticked higher on Friday, as reassurances from Opec+ members Saudi Arabia and Russia indicating readiness to pause or reverse output agreements, but markets were headed for their third consecutive weekly losses.
Brent crude futures rose 2c to $79.89 a barrel and US West Texas Intermediate (WTI) crude futures rose 4c to $75.59 by 3.18am GMT.
“Oil prices managed to regain some ground over the past few days, tapping on some reassurances from Opec+ around their latest supply decision,” said Yeap Jun Rong, market strategist at IG.
“We may expect oil prices to hover around the $76-$80 level, as sentiments attempt to stabilise while awaiting cues for the next step.”
Prices rallied on Thursday when Saudi Arabia and Russia tried to reassure markets on supply agreements. But they are set for a third consecutive week of declines after analysts saw Sunday’s Opec+ meeting as indicating rising supply which is bearish for prices.
Oil cartel Opec and allies including Russia agreed to extend most production cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually.
Saudi energy minister Prince Abdulaziz bin Salman said on Thursday Opec+ could pause or reverse voluntary output increases if it decided the market is not strong enough.
“We are ready to react quickly to market uncertainties,” Novak said at the event, adding the price drop after the weekend meeting was caused by misinterpretation of the agreement and “speculative factors”.
Jarand Rystad, founder and CEO of Rystad Energy consultancy, told Reuters that Opec+ would probably persist in managing the market but “further cuts may be necessary as demand softens slightly while the supply remains sufficient unless adjustments are made”.
“The sweet spot for Opec+ lies within the price range we’ve witnessed — low 80s to high 70s [in dollars a barrel]. Despite some Russian volumes being cut from the market due to sanctions and drone attacks, the impact remains manageable.”
The European Central Bank (ECB) went ahead with its first interest rate cut since 2019 on Thursday, prompting analyst expectations of the US Federal Reserve following the suit. Lower rates boost oil demand.
US nonfarm payrolls data for May, due at 12.30pm GMT on Friday, could shed more light on the timing of the Fed’s rate cuts in 2024.
China, the world’s biggest crude importer, imported 46.97-million metric tonnes of crude oil in May, official data from customs showed on Friday.
Reuters
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