Oil futures rose Friday, on track for a sixth straight weekly gain after Saudi Arabia and Russia said they would extend supply cuts.
Price action
- West Texas Intermediate crude for September delivery CL00,
+0.36% CL.1,+0.36% CLU23,+0.36% rose 50 cents, or 0.6%, to $82.04 a barrel on the New York Mercantile Exchange, on track for a weekly gain of 1.8%. - October Brent crude BRN00,
+0.38% BRNV23,+0.38% , the global benchmark, gained 51 cents, or 0.6%, to trade at $85.65 a barrel on ICE Futures Europe, set for a weekly rise of 1.5%. - Back on Nymex, September gasoline RBU23,
+1.67% rose 1.4% to $2.803 a gallon, but was nursing a weekly loss of nearly 3%. September heating oil HOU23,-0.11% gained 0.3% to $3.084 a gallon, headed for a 4.6% weekly jump. - September natural gas NGU23,
+0.19% ticked up 0.1% to $2.568 per million British thermal units, set for a weekly decline of 2.6%.
Market drivers
Oil was on track to end the week on a positive note, recovering from a Wednesday stumble that followed a Fitch Ratings cut of the U.S. sovereign credit rating to AA+ from AAA that dented market sentiment. Crude regained its footing after Saudi Arabia on Thursday said it would extend a 1 million barrel-a-day cut in production through September and warned that the reduction could be extended, deepened, or both.
Russia also said it would curb exports by 300,000 barrels a day through September.
Supply cuts by OPEC+ have fed a roughly $10 a barrel rise by Brent since the beginning of July, with output by the 10 members of the group bound by quotas falling from 23.4 million barrels per day, or bpd, in June to 22.6 million bpd in July, Edward Gardner, commodities economist at Capital Economics, said in a note.
The move was mostly the result of Saudi Arabia’s 1 million barrel-a-day cut, which first took effect on July 1.
“Going forward, we forecast that Brent will end the year at around $85 per barrel. After all, OPEC+ appears committed to limiting supply. We also forecast a 2% y/y (year over year) increase in global oil demand” in the second half of 2023, Gardner said.
Brent is unlikely to rise much above $85 a barrel, however, because an increase in global inventories in the first half of the should help to compensate for the supply shortfall in the second half, Gardner wrote, noting that U.S. inventories remain up year to date and China appears to have been stockpiling crude.
