Global oil prices saw a notable rebound on Monday as top oil exporters Saudi Arabia and Russia reiterated their commitment to extending voluntary oil supply cuts until the end of the year. This move aimed at stabilizing global oil markets came after both Brent and WTI crude futures had experienced a substantial loss of approximately 6% in the week leading up to November 3.
Brent crude futures showed a significant increase of $1.03, marking a 1.21% rise, bringing the price per barrel to $85.92 by 0834 GMT. Simultaneously, U.S. West Texas Intermediate crude also displayed a strong performance, with a $1.07 increase, representing a 1.33% gain, and settling at $81.58 per barrel.
The decision to prolong the voluntary oil supply cuts was confirmed by Saudi Arabia and Russia, two of the world’s largest oil-producing nations. Saudi Arabia, through its Ministry of Energy, affirmed its commitment to maintaining an additional voluntary cut of 1 million barrels per day (bpd) throughout December. This move is aimed at keeping its oil output at approximately 9 million bpd.
Russia, in sync with Saudi Arabia’s commitment, announced that it would continue its additional voluntary supply cut of 300,000 bpd, covering both crude oil and petroleum product exports. These measures are set to persist until the end of December, underscoring the two nations’ dedication to supporting oil market stability.
Analysts at ING noted that despite these actions, the oil market is expected to face a surplus in the first quarter of the coming year. They suggested that this surplus might influence Saudi Arabia and Russia’s decisions on whether to prolong the cuts further.
However, the positive impact on oil prices may have been partially offset by a reduction in crude oil throughputs at Chinese refineries. Refinery runs have been declining from the record levels observed in the third quarter due to diminishing profit margins and a shortage of export quotas extending to the year-end, according to sources cited by Reuters.
PVM analyst Tamas Varga commented on this situation, explaining, “The reaction to the Saudi/Russian decision over the weekend to extend their respective output and exports cut throughout December has been, to some extent, countered by the anticipated fall in China’s refinery throughput this month.”
Market watchers are now awaiting further economic data from China, as the world’s second-largest oil consumer recently released disappointing October factory data. This data will likely play a significant role in determining the future trajectory of global oil prices.