Oil prices decline as Saudi Arabia and Russia expect to increase supplies

29 Sep 2023 , 10:26 AM

After a recent surge, oil prices dipped in early trade on Friday as profit-taking and anticipation of supply increases by Saudi Arabia and Russia overshadowed hopes of strong demand from China during its Golden Week holiday.

The Friday expiring Brent November contract was down 21 cents to $95.17 a barrel. Brent December futures were down 10 cents, trading at $93.00 a barrel. West Texas Intermediate (WTI) crude for the United States dropped 8 cents to $91.63 a barrel.

Trading profits after prices climbed to 10-month highs, and some traders were concerned that high interest rates would have an impact on oil consumption, caused oil prices to decline by roughly 1% on Thursday. The OPEC meeting on October 4 will be crucial for the market because there is a growing likelihood that Aramco’s voluntary production cuts will be scaled back.

The Organization of the Petroleum Exporting Countries (OPEC) and allies, which includes Saudi Arabia and Russia, have agreed to reduce 1.3 million barrels per day of supply until the end of the year.

Russia recently relaxed a separate embargo on petroleum exports that it had imposed to stabilize the domestic market, and analysts do not anticipate the limits to last for very long because they could affect refinery throughput and customer relations.

According to the Kremlin, Russia and OPEC+ have not discussed ways to enhance the supply of crude oil to make up for the suspension of fuel shipments by Moscow.

Global oil demand was boosted by recent macroeconomic statistics and China’s week-long Golden Week holiday, which started on Friday.

According to figures released on Thursday, the U.S. economy kept up a respectable rate of growth in the second quarter, and this quarter’s activity appears to have picked up.

According to a Reuters survey, factory activity in China likely stabilized in September, adding to a string of signs that the world’s second-largest economy has started to stabilize. On Saturday, official numbers are expected.

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