By Arathy Somasekhar
HOUSTON (Reuters) – Oil prices rose on Monday after major exporters Saudi Arabia and Russia reaffirmed their commitment to voluntarily cut oil production through the end of the year.
Saudi Arabia demonstrated on Sunday that it would continue its new voluntary cut of 1 million barrels per day (bpd) in December to keep output at around nine million bpd, the energy ministry said.
Russia also announced that it would continue its voluntary relief of 300,000 bpd on its exports of crude oil and petroleum products until the end of December.
“This announcement indicates that Saudi Arabia is in the driver’s seat as it seeks to tighten markets and raise prices,” said John Kilduff, a partner at Again Capital LLC in New York.
The cuts could extend into the first quarter of 2024 due to “seasonally weaker oil demand at the beginning of each year, continued economic expansion concerns, and the goal of industries and OPEC to stabilize and balance the oil market. “UBS strategist Giovanni Staunovo said.
Oil prices rebounded after either benchmark index lost about 6% in the week to Nov. 3 as concerns about tensions in the Middle East eased.
The heads of U. N. agencies demanded a humanitarian ceasefire on Monday, a month after the start of the war in Gaza, while the health government in the enclave said the death toll from Israeli actions now exceeds 10,000.
However, declining crude yields at Chinese and U. S. refineries weighed on prices.
Operations at Chinese refineries are slowing from record levels in the third quarter due to eroding profit margins and tight export quotas through the end of the year, investors and industry experts told Reuters.
Investors will be watching for fresh economic data coming out of China on Tuesday, following last week’s weak trade data.
Macroeconomic considerations persist in Europe, where Purchasing Managers’ Index (PMI) data showed that the slowdown in business activity in the euro accelerated in October as buying expectations weakened further.
The Bank of England’s chief economist, Huw Pill, said he could wait until the middle of next year before cutting interest rates from their highest level in 15 years. The lower debt burden is expected to boost spending and require crude oil. .
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