Crude oil futures closed higher on Friday (Aug. 4), reaching the highest level of the year, as they extended gains for a sixth consecutive week. The surge came in response to the outcome of the Joint Committee on Ministerial Examinations (JMMC) meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC Plus, which confirmed their commitment to reducing oil production until the end of the next year.
West Texas Intermediate (WTI) crude futures rose by $1.27, representing a 1.6% increase, and settled at $82.82 a barrel, marking a 2.8% gain for the week. Similarly, Brent crude futures climbed $1.10, or 1.3%, settling at $86.24 a barrel, and recorded a 2.2% increase for the week.
During the JMMC’s video conference on Friday, the members decided to uphold the production policy previously agreed upon in June. As a result of this decision, OPEC Plus will continue to reduce total output by 3.66 million barrels per day until the end of 2024. The group’s proactive approach to managing supply has been a driving force behind the recent rally in oil prices.
The next scheduled JMMC meeting is set to take place on October 4 of this year, where further discussions and assessments of the oil market will likely be conducted.
The recent surge in oil prices was also fueled by the tightness in the oil market. Saudi Arabia made an important announcement during this period, extending the time for cutting oil production. The Kingdom announced a voluntary reduction of 1 million barrels per day of oil output until the end of September.
With this decision, Saudi Arabia aims to produce 9 million barrels per day of oil in September, representing a voluntary reduction in oil production for the third consecutive month since July. The country’s proactive role in curbing production has been instrumental in supporting the oil market and stabilizing prices.
In addition to Saudi Arabia’s voluntary cuts, Russian Deputy Prime Minister Alexander Novak confirmed Russia’s commitment to reducing oil exports by 300,000 barrels per day in September. Russia’s contribution to limiting exports further underlines the collective efforts of OPEC Plus in balancing the global oil market.
The market’s positive response to the OPEC Plus decisions and the tightening oil supply are expected to influence oil prices in the coming weeks. As the world economy continues to recover, demand for oil remains robust, and the proactive measures taken by major oil-producing countries have instilled confidence in market stability. Investors will closely monitor how the oil market evolves in the coming months, considering both demand-side factors and the supply management strategies of OPEC Plus.
The Spot Market is Closed
Saturday, August 5, 2023