Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo acquire license rights
SINGAPORE, Nov 6 (Reuters) – Oil prices rose slightly on Monday after top exporters Saudi Arabia and Russia said they would stick with additional voluntary cuts in oil production until the end of the year to keep supplies tight , while investors waited for tougher US sanctions on Iranian oil.
Brent crude futures rose 41 cents, or 0.5%, to $85.30 a barrel by 0000 GMT, while U.S. West Texas Intermediate crude was at $81.05 a barrel, up 54 cents or 0.7%.
In line with analysts’ expectations, Saudi Arabia confirmed it would continue its additional voluntary cut of 1 million barrels per day (bpd), bringing production to about 9 million bpd for December, an energy ministry source said in a statement .
Following the Saudi statement, Moscow also announced that it would continue its additional voluntary supply cut of 300,000 bpd from its crude oil and petroleum products exports until the end of December.
Both contracts posted their second weekly decline last week, down about 6%, driven by a weakening geopolitical risk premium stemming from concerns about supply disruptions due to a possible escalating conflict in the Middle East.
On Sunday, Israel rejected growing international pressure for a ceasefire as the top U.S. diplomat struggled to contain a crisis that threatened further escalation in neighboring Lebanon.
“The risk premium associated with the geopolitical backdrop has completely disappeared after two weeks of volatile prices,” ANZ analysts said in a note.
“The market’s focus has shifted to the demand outlook, which remains uncertain.”
This week, investors await more economic data from China after the world’s second-largest oil consumer released disappointing factory data for October last week.
Sydney-based IG analyst Tony Sycamore expects oil prices to be driven by Middle East headlines and technical charts this week.
He added that WTI must remain above the support level of $80 per barrel earlier this week, otherwise prices could fall to the low of $77.59 recorded in August.
On Friday, the US House of Representatives passed a bill to toughen sanctions on Iranian oil, which, if enacted, would include measures against foreign ports and refineries that process petroleum exported from Iran.
In the United States, the number of drilling rigs fell by 8 last week to 496, the lowest level since January 2022, energy services company Baker Hughes said in its weekly report on Friday.
Reporting by Florence Tan and Colleen Howe, editing by Shri Navaratnam
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