Crude oil futures soared above the $83 mark on Thursday, August 31, as anticipation swirled regarding the intentions of the Organization of the Petroleum Exporting Countries (OPEC) and its allied partners, collectively known as OPEC Plus. Market participants speculated that these oil-producing nations, led by Saudi Arabia, would prolong their efforts to curtail oil production, extending these measures until the close of the year.
During the trading session, WTI crude oil futures displayed remarkable resilience, marking an impressive gain of $2 or 2.5%, settling at $83.63 per barrel. In parallel, BRENT crude futures also experienced an upward surge, climbing by $1 or 1.2%, culminating at $86.86 per barrel.
Throughout the course of August, WTI futures charted a notable ascent of 2.2%, while Brent futures showcased a rise of 1.5%, collectively attaining monthly gains for the third consecutive month.
This market rally was largely underpinned by the widely held belief that OPEC+ would persist in constraining production well into the year-end. Furthermore, market analysts foresaw Saudi Arabia’s commitment to extending voluntary oil production cuts, amounting to 1 million barrels per day, until October. This additional commitment supplements the ongoing endeavors of the OPEC+ consortium aimed at reducing overall oil production.
In a parallel boost to market sentiment, the US Energy Information Administration (EIA) report indicated a significant decline of 10.6 million barrels in US crude oil inventories over the past week. This substantial reduction exceeded analyst projections, which had initially forecasted a decrease of 5.2 million barrels.
Additionally, market dynamics were also influenced by the conjecture surrounding the Federal Reserve (Fed) altering its stance on interest rate hikes. This speculation arose following the release of US inflation figures that aligned closely with market expectations. The US Department of Commerce revealed that the general personal consumption expenditures (PCE) price index, inclusive of both food and energy components, exhibited a year-on-year increase of 3.3% in July. This figure closely mirrored the predictions set forth by analysts.
In summation, the surge in oil prices above $83 showcased the market’s positive response to the prospects of OPEC+ extending their production cut initiatives until the culmination of the year. As demonstrated by the resilient performance of both WTI and Brent crude futures, these expectations underscore the influential role played by global oil-producing nations in steering market dynamics. Additionally, favorable inventory data, coupled with shifting expectations around the Federal Reserve’s monetary policy, contributed to the robust rally in oil prices during the trading session.
The Spot Market is Open
Friday, September 1, 2023
| Energy Updated at | USD Price | Change | %Change |
| Crude Oil 07.00 | 83.59 | -0.04 | -0.05% |