Oil prices increase

7 Jun 2024 , 08:51 AM

Oil prices increased on Friday, continuing their upward trend after Russia and Saudi Arabia, two OPEC+ members, said that they would cut down oil production. A cut in interest rate by European Central Bank and Bank of Canada has improved demand prospect for oil.

U.S. West Texas Intermediate crude futures increased 16 cents, or 0.2%, to $75.71, while Brent crude futures increased 16 cents, or 0.2%, to $80.03 a barrel.

As Russia and Saudi Arabia attempted to reassure markets about their supply arrangements, prices rose on Thursday. They are, however, expected to lose money this week as analysts interpret the OPEC+ meeting on Sunday as a sign of increasing production, which is negative for prices.

The Organisation of the Petroleum Exporting Countries, or OPEC+, along with its allies, including Russia, decided to extend the majority of production cuts until 2025, but they also allowed for the slow unwinding of eight members’ voluntary reductions.

OPEC+ has the authority to suspend or reverse voluntary output increases if it determines that the market is not robust enough. Prince Abdulaziz bin Salman, the Saudi Energy Minister, made this statement while attending an event in Russia on Thursday with Russian Deputy Prime Minister Alexander Novak.

At the event, Novak stated, “We are ready to react quickly to market uncertainties,” adding that “speculative factors” and a misreading of the agreement were to blame for the price decline that followed the weekend summit.

Analysts had anticipated that the U.S. Federal Reserve will follow suit after the European Central Bank announced its first interest rate drop since 2019. Reduced rates increase the need for oil.

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