(LONDON) Oil prices continued their small rise on Friday, pushed by tight supply, as Saudi Arabia extended its unilateral production cut until September, and Russia followed suit.
Around 5:45 a.m. (11:45 a.m. in Paris), a barrel of Brent from the North Sea, for delivery in October, took 0.52% to 85.58 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in September, gained 0.58% to 82.02 dollars.
“Brent crude erased much of its [mid-week] declines after OPEC titans Saudi Arabia and Russia agreed to continue lowering their production levels in September,” comments Han Tan, analyst for Exinity.
Saudi Arabia will extend by one month the reduction of its oil production by one million barrels per day that began in July. This measure could still be “extended” beyond this period, or even “extended and reinforced”, according to the Saudi Ministry of Energy in a press release.
“Saudi Arabia thus provides a firm floor for oil prices,” say DNB analysts, who expect “significant declines in oil inventories in the coming months.”
Russia then followed suit with the Kingdom. Deputy Prime Minister Alexander Novak thus assured that his country would reduce its exports by 300,000 barrels per day in September.
These extensions of voluntary production cuts came before the meeting of the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries and their allies (OPEC) on Friday.
The Russian and Saudi interventions have “once again brought market attention back to the tightness of the oil market,” says John Evans of PVM Energy.
“The record drop in U.S. crude oil inventories has also helped push Brent crude closer” to its highest price in more than three months, Tan said.
On Wednesday, U.S. crude inventories fell by a record 17 million barrels, according to weekly data released by the U.S. Energy Information Agency (EIA) for the week ended July 28.
