Oil price increases also bolstered by expectations of end to US Federal Reserve’s ‘hawkish’ policies
Oil prices increased in early trade on Monday due to the decision of Saudi Arabia and Russia, the world’s largest oil exporters, to extend their voluntary additional production cuts until the end of the year.
International benchmark crude Brent traded at $85.62 per barrel at 10.41 a.m. local time (0741 GMT), a 0.86% rise from the closing price of $84.89 a barrel in the previous trading session on Friday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $81.17 per barrel,up 0.82% from Thursday’s close of $80.51 per barrel.
Oil markets started the week with price upswings based on Saudi Arabia’s decision on Sunday to prolong the voluntary additional oil production cut of 1 million barrels per day (bpd), which was implemented in July, until the end of the year.
With Saudi Arabia’s decision to implement an additional output cut of 1 million bpd following a cut of 500,000 bpd until December 2024, the country’s oil production is expected to be at the level of 9 million barrels by December this year.
The Russian Energy Ministry’s announcement on Friday of a fall in the country’s exports of oil and oil products by more than 300,000 bpd in November compared to the average for the May-June period also supported price rises.
The country had already reduced its oil production by 500,000 barrels per day in April and oil exports by 300,000 barrels per day in September.
Meanwhile, expectations of an end to the US Federal Reserve’s “hawkish” policies put upward pressure on oil prices.
Investor expectations surged of the Fed abandoning raising interest rates as the US economy’s employment growth fell short of projections and indicated a softening of the tight labor market.
A further factor driving up prices was the weakening of the US dollar, making dollar-pegged oil cheaper for investors in other currencies, causing a rise in demand and prices.
Source: aa