LONDON, Sept. 4 (Reuters) – Oil prices stabilized on Monday amid expectations that major producers will maintain tight supplies, with hopes growing that the Federal Reserve will leave interest rates unchanged to avoid hurting the US economy.
Brent crude futures for November delivery were up 5 cents at $88.60 a barrel by 1110 GMT. US West Texas Intermediate crude futures for October rose 2 cents to $85.57 a barrel.
Both contracts ended last week at their highest levels in more than half a year, after two previous weeks of losses.
“Crude oil prices were primarily driven by the anticipation of additional supply cuts from major oil producing countries, Russia and Saudi Arabia,” said Sugandha Sachdeva, Executive Vice President and Chief Strategist at Acme Investment Advisors.
Sachdeva added that the steady increase in US oil production could limit further significant gains in prices.
Saudi Arabia is expected to extend a voluntary cut of 1 million bpd until October. Saudi Arabia’s previous announcements about extending the voluntary cut came before official selling prices, which are usually released in the first week of the month.
Russia has already announced a 300,000 bpd cut in exports in September, after a 500,000 bpd cut in August.
Russian Deputy Prime Minister Alexander Novak said today, Thursday, that Russia has agreed with partners in the Organization of the Petroleum Exporting Countries on the criteria for continuing export cuts.
An official announcement detailing the planned cuts is expected this week.
Vitol CEO Russell Hardy said on Monday that the global crude market is expected to decline in the next six to eight weeks due to refinery maintenance work, but supplies to complex refineries in India, Kuwait, Jizan (Saudi Arabia), Oman and China are high-sulfur crude, with Higher sulfur content, will remain tight due to OPEC+ cuts.
In the US, job growth gained momentum in August, but the unemployment rate rose to 3.8% and wage gains moderated, indicating a sluggish labor market and reinforcing expectations that the Federal Reserve will not further dampen the economy by raising interest rates this month.
In China, manufacturing activity unexpectedly expanded in August, a survey of purchasing managers’ index indicated, limiting some pessimism about the economic health of the world’s largest oil importer, whose beleaguered real estate sector has weighed on its economy since emerging from the COVID-19 pandemic.
Investors saw some positivity in Beijing’s economic support measures last week, such as interest rate cuts on deposits at some of the largest state-owned banks and an easing of homebuyers’ borrowing rules.
(Reporting by Paul Karsten in London and Mohi Narayan in New Delhi; Reporting by Mohamed for The Arabic Bulletin) Additional reporting by Youssef Saba in Dubai and Andrew Haley in Beijing; Reporting by Mohamed for the Arabic Bulletin; Editing by Simon Clarence Fernandez and Jason Neely
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