Oil holds breath ahead of OPEC+ supply cut expectations (updated)

Acme United

04/09/2023 05:19

(Adds Saudi cut expectations, updates prices at 1110 GMT)
    By Paul Carsten
       LONDON, Sept 4 (Reuters) - Oil prices were stable on
Monday amid expectations that major producers would keep
supplies tight, as hopes grew for the Federal Reserve to leave
interest rates unchanged to avoid dampening the U.S. economy.
    Brent crude  LCOc1  futures for November crept 5 cents
higher to $88.60 a barrel by 1110 GMT. U.S. West Texas
Intermediate crude (WTI)  CLc1  October futures rose 2 cents to
$85.57 a barrel.
    Both contracts ended last week at their highest in more than
half a year, after two previous weeks of losses. 
    "Crude oil prices have been primarily driven by the
anticipation of additional supply cuts from major oil-producing
nations, Russia and Saudi Arabia," said Sugandha Sachdeva,
executive vice president and chief strategist at Acme Investment
Advisors.
    Sachdeva added, however, that the steady increase in U.S.
oil production could limit further significant gains in price.
    Saudi Arabia is expected to roll over a voluntary
1-million-barrel per day (bpd) cut into October. Saudi Arabia's
previous announcements on its voluntary cut extension came ahead
of its official selling prices, which typically come out in the
first week of the month.
    Russia has already announced September export cuts of
300,000 bpd, following a 500,000-bpd cut in August.
        Russian Deputy Prime Minister Alexander Novak said on
Thursday Russia had agreed with partners in the Organization of
the Petroleum Exporting Countries on the parameters for
continued export cuts, 
    An official announcement detailing the planned cuts is
expected this week.
    Vitol CEO Russell Hardy said on Monday the global crude
market should ease in the next six to eight weeks because of
refinery maintenance, but supplies to complex refineries in
India, Kuwait, Jizan (Saudi Arabia), Oman and China of sour
crude, with higher sulphur content, will stay tight due to OPEC+
cuts.
    In the U.S., job growth gained momentum in August, but the
unemployment rate climbed to 3.8% and wage gains moderated,
suggesting a cooling labour market and cementing expectations
the Federal Reserve will not dampen the economy further by
raising interest rates this month.
    In China, manufacturing activity unexpectedly expanded in
August, a PMI survey indicated, curbing some pessimism about the
economic health of the world's largest oil importer, whose
embattled property sector has dragged on its economy since
emerging from the COVID-19 pandemic.
    Investors saw some positivity in Beijing's economic support
measures last week, such as deposit rate cuts at some of the
largest state-owned banks and an easing of home buyer borrowing
rules.

 (Reporting by Paul Carsten in London and Mohi Narayan in New
Delhi; Additional reporting by Yousef Saba in Dubai and Andrew
Hayley in Beijing; editing by Simon Clarence Fernandez and Jason
Neely)
 ((paul.carsten@thomsonreuters.com; Twitter/X: @PaulCarsten))