Oil Prices Rise as OPEC Extends Output Cuts, Non-Farm Payrolls Data Keeps Gains Limited
Oil prices surged in early Asian trade on Friday, on track for the sixth consecutive week of gains, after OPEC decided to extend recent output cuts. However, the market’s focus on tonight’s non-farm payrolls data has limited the gains.
As of the market close, the price of West Texas Intermediate (WTI) crude oil rose by 0.13% to $85.25 per barrel, while Brent crude rose by 0.17% to $81.72 per barrel.
On Thursday, ahead of the OPEC+ meeting, several member countries announced their decision to delay their own output cuts until the end of December, and possibly beyond. Saudi Arabia confirmed its production cut of 1 million barrels per day, while Russia stated it would reduce its output by 300,000 barrels per day.
The news of further production cuts by these OPEC members drove oil prices higher, recovering losses seen earlier in the week. Traders are betting that the tightening of crude supplies, amidst a weakening global economy, will offset any potential decline in demand this year.
However, the rise in crude oil prices has also been impacted by the unexpected increase in U.S. storage inventories last week. The build-up of over 17 million barrels, the highest level in the data going back to 1982, suggests that the world‘s biggest crude consumer is experiencing a tightening supply. Despite the recent downgrade of the U.S. sovereign rating by Fitch, analysts still believe that oil prices will improve this year as supplies continue to tighten.
It is important to note that while oil prices are predicted to rise for the sixth consecutive week, the gains in recent sessions are expected to slow due to the strengthening of the U.S. dollar.
In addition, earlier this week, private payrolls data showcased strength in the U.S. job market, indicating that similar numbers can be expected in the non-farm payrolls data to be released later today. This positive employment data is expected to support the Federal Reserve’s hawkish outlook and keep the dollar on the rise.
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(Editor: Li Shanwen)