Oil prices set for sixth weekly gain as producers pledge output cuts

Brent crude oil price news: Oil prices rose for a second day on Friday, set for their sixth week of gains, after Saudi Arabia and Russia, the world's second and third-largest crude producers, pledged to cut output through next month.

Brent crude oil price news: Oil prices rose for a second day on Friday, set for their sixth week of gains. Image: Reuters

Brent crude oil price news: Oil prices rose for a second day on Friday, set for their sixth week of gains, after Saudi Arabia and Russia, the world's second and third-largest crude producers, pledged to cut output through next month. Brent crude futures for October rose 30 cents, or 0.4 per cent, to $85.44 a barrel by 0042 GMT, while U.S. West Texas Intermediate crude for September rose 36 cents, or 0.4 per cent, to $81.90. Brent on Thursday clawed back a 2 per cent drop in the Wednesday session, leaving futures set for a 0.4 per cent weekly gain, while WTI was to close the week up 1.4 per cent higher after U.S. crude inventories fell by the most ever on Wednesday.

Both benchmarks were on track for a sixth week of gains, their longest streak of weekly gains this year. Saudi Arabia's statement on Thursday to extend a voluntary oil production cut of 1 million barrels per day (bpd) for another month to include September came a day before ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, are set to meet. The Joint Ministerial Monitoring Committee of OPEC+ is unlikely to tweak overall oil output policy at the meeting on Friday, sources have said. But the Saudi Arabian pledge plus comments from Russian Deputy Prime Minister Alexander Novak that it will also cut its oil exports by 300,000 bpd in September have raised concerns about supply and supported prices.

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OPEC+ agreed on a broad deal to limit supply into 2024 at its last policy meeting in June, and at that time Saudi Arabia pledged to voluntarily cut more production for July and then extended it to August. After the Saudi Arabian decision, White House national security spokesman John Kirby said the United States, will continue to work with producers and consumers to ensure the energy market promotes growth. The U.S. is the world's biggest oil producer. Even with the supply cuts, the latest batch of U.S. economic data showing tight labor markets and a slowing service sector has the market worried about demand.

Additionally, the downturn in euro zone business activity worsened more than initially thought in July and the Bank of England raised its key interest rate by a quarter of a percentage point to a 15-year peak on Thursday, and warned that borrowing costs were likely to stay high for some time. Higher borrowing costs for businesses and consumers could slow economic growth and reduce oil demand.

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