Oil prices push higher as Saudi, Russian cuts spell tighter supply
Investing.com-- Oil prices rose further in Asian trade on Wednesday, sticking to 10-month highs as bigger-than-expected supply cuts by Saudi Arabia and Russia pointed to tighter supplies this year.
Prices extended bumper gains from the prior session, after Saudi Arabia said it will extend its current 1 million barrel per-day cut until end-December, while Russia will maintain its 300,000 barrel per-day export curbs until the end of the year. The two will also review the cuts on a monthly basis, and adjust them according to market conditions.
The move blindsided markets, given that analysts were looking at an extension of Saudi and Russian curbs until only end-October. But global oil markets are now set to tighten substantially this year, especially if demand remains steady.
Brent oil futures expiring in November rose 0.1% to $90.24 a barrel, while West Texas Intermediate crude futures expiring in October rose 0.3% to $86.93 a barrel by 20:36 ET (00:36 GMT). Both contracts were at their highest level since mid-November.
Tuesday’s supply cuts helped markets largely look past concerns over sluggish demand in China, after a series of mixed economic readings from the world’s largest oil importer.
Oil prices also largely disregarded pressure from a stronger dollar, as the greenback hit a near six-month high before a string of Federal Reserve speakers this week.
Concerns over slowing Chinese demand and higher-for-longer U.S. rates had chipped away at oil prices this year, as a Chinese economic recovery stalled and as the Fed largely maintained its hawkish rhetoric.
This had driven oil prices to as low as $70 a barrel, which was what drove Saudi Arabia into cutting production and supporting prices. The Kingdom, along with
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