(Bloomberg) – Oil traded above $76 a barrel per day after OPEC+ stalwarts Saudi Arabia and Russia agreed to support prices by limiting supply.
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Brent rose about 2% in London, although volumes were subdued due to the July 4 holiday in the United States. In a flurry of announcements on Monday, Saudi Arabia said it would extend a unilateral supply cut of 1 million barrels per day until August, while Russia declared a reduction in exports and the production. Algeria planned to make more modest curbs.
Russia will cut oil exports by 500,000 barrels a day in August and aims to cut production by the same amount, Deputy Prime Minister Alexander Novak has said. Algeria will cut production by 20,000 barrels a day next month. So far this year, Moscow has been slow to comply with previously agreed cuts under pressure to keep funds flowing for its war on Ukraine.
Saudi Arabia announced on June 4 its initial reduction of 1 million barrels per day for July. Oil prices have not risen since then, with Brent crude little changed over the past month.
“The fact that the markets did not react as expected by the Saudi energy ministry has raised concerns that they will not extend this reduction,” Daniel Ghali, an analyst at TD Securities, said by telephone. Monday’s decision “signals that, although prices did not recover immediately, Saudi Arabia remains committed to its decision to prevent oil prices from falling further.”
Crude prices also face a major technical hurdle. Brent futures rose above their 50-day moving average on Monday, but did not close above that level. They have generally struggled to move much beyond this marker since prices turned extreme in late April.
However, in a more bullish signal from the futures curve, Brent’s nearest time gap closed Monday at its highest level in about a month, indicating expectations of tighter supply.
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