Oil edged up after Saudi Arabia and Russia reaffirmed they will stick with oil supply curbs of more than 1 million barrels a day through the end of the year.
West Texas Intermediate swung in a nearly $2 range on Monday before settling up less than 1% near $81 a barrel. Stronger gains from earlier in the session faded in the afternoon as crude tracked equities lower. Still, oil is trading at prices seen before the Israel-Hamas war began as the fighting fails to disrupt output from the Middle East, the source of about a third of the world’s crude.
While the conflict still could spread, the Organization of Petroleum Exporting Countries and its partners are keeping tight control over supplies amid a shaky demand outlook, underscored by a surprise contraction in Chinese manufacturing last month. Saudi Arabia has slashed daily production by 1 million barrels, and Moscow is curbing exports by 300,000 barrels, on top of earlier cuts made with fellow OPEC+ nations.
“Crude is trading modestly higher today following confirmation that Saudi Arabia and Russia will roll over their voluntary cuts,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.
Saudi Aramco, meanwhile, kept its December official selling prices for two of five oil grades unchanged to Asian customers. However, the kingdom slashed its prices for Europe, a further sign of the concern about softer consumption in the region.
In another bearish signal, more traders are paying a higher premium for contracts that profit from a price decline rather than a rally. The gauge known as the put skew widened to levels last seen in mid-October. Hedge funds also slashed bullish bets on US crude by the most since July 2021.
- WTI for December delivery rose 31 cents to settle at $80.82 a barrel in New York.
- Brent for January settlement increased 29 cents to settle at $85.18 a barrel.