August 4, 2023 [Reuters]- Oil prices were on track for a sixth week of gains after Saudi Arabia and Russia, the world’s second and third-largest crude producers, pledged to cut output through September.
Brent crude futures for October rose 43 cents to $85.57 a barrel by 0825 GMT, while U.S. West Texas Intermediate crude for September were up 47 cents to $82.02.
Both benchmarks were set for their longest streak of weekly gains this year. Brent has risen 15.4% and WTI by 18.2% during the last six weeks.
Saudi Arabia on Thursday extended a voluntary oil production cut of 1 million barrels per day (bpd) to the end of September, keeping the door open for another extension. Russia has also elected to reduce its oil exports by 300,000 bpd next month.
In focus is a meeting on Friday of OPEC+ – the Organization of the Petroleum Exporting Countries and allies.
“In isolation, oil looks so very good. But we have not traded in isolation for years and although we often like to feel our market is detached from the wider suite, it is not,” said John Evans of oil broker PVM.
“It is a large piece in the puzzle of global markets and while macroeconomic data deliver unfavourable growth signals, the however(s) will continue.”
Those questions came in the form of the latest batch of U.S. data showing tight labor markets and a slowing service sector, raising concerns of an economic slowdown that could curb demand for oil and pressure prices, even with the supply cuts.
“A strong dollar has weighed on crude prices and everyone wants to know if a hot labor market will force the Fed to tighten policy even further,” said Edward Moya, an analyst at OANDA, referring to the U.S. Federal Reserve potentially raising interest rates.
Additionally, the downturn in euro zone business activity worsened more than initially thought in July and the Bank of England raised its interest rate to a 15-year peak on Thursday. Higher borrowing costs for businesses and consumers could slow economic growth and reduce oil demand.
“The upcoming US non-farm payroll (data) will be in focus, and steer market sentiment tonight,” said Tina Teng, an analyst at CMC markets, referring to data on U.S. employment.
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