(LONDON) Oil prices continued to rise on Friday, pushed by expectations of a further extension of production cuts from Saudi Arabia and Russian exports for the month of October.
Around 5:55 a.m., a barrel of Brent from the North Sea, for delivery in November, of which this is the first day of use as a benchmark contract, took 1.04% to 87.73 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in October, gained 1.08% to 84.63 dollars.
The two global oil benchmarks are on course for a strong weekly gain and are trading at levels close to their year highs.
“This price level would theoretically give Saudi Arabia the ability to reverse at least part of its voluntary 1 million barrel per day production cut,” noted Commerzbank analyst Barbara Lambrecht.
But “Russian Deputy Prime Minister Novak’s latest remarks argue against” that scenario, she said. He assured that Russia and the members of the Organization of the Petroleum Exporting Countries and their allies (OPEC) have agreed on further production cuts.
“We will publicly announce the main parameters next week,” he told Russian President Vladimir Putin in a televised government meeting on Thursday.
“Most market participants and analysts also assume that the cuts will be extended,” Ms. Lambrecht also recalls.
These expectations are therefore factored into crude prices, “so that lower prices would be likely if Saudi Arabia withdrew its production cut,” she explains. The analyst therefore leans for a “cautious” approach from Russia and Saudi Arabia, which are expected to “virtually not” increase their crude supply next month.
Expectations of extended supply cuts have combined with “an impressive reduction in inventory in the United States, which revealed strong demand ahead of Labor Day weekend,” comments Neil Wilson, analyst at Finalto.
U.S. crude reserves fell by 10.6 million barrels last week as analysts expected a reduction of 2.2 million, according to figures from the U.S. Energy Information Administration (EIA). ) published on Wednesday.