After indications from Saudi Arabia and Russia, two OPEC+ members, that they were prepared to halt or overturn output agreements, oil prices rose on Friday.
This decision heightened anticipation of a comparable U.S. action, as did a European interest rate drop. U.S. West Texas Intermediate crude prices jumped by 16 cents to $75.71, while Brent crude futures increased by 16 cents to $80.03 per barrel.
Weekly Trends and Market Reactions :
Given assurances on supply agreements from Saudi Arabia and Russia, oil prices rose on Thursday. Despite this, economists predict that Sunday’s OPEC+ meeting will result in more supply, which would push prices lower, and that prices will drop this week.
The Organisation of the Petroleum Exporting Countries (OPEC+) and its allies, such as Russia, agreed to keep the majority of output cuts in place until 2025 while allowing eight members’ voluntary reductions to be gradually unwound.
OPEC+ Market Management and Strategy :
Russian Deputy Prime Minister Alexander Novak and Saudi Energy Minister Prince Abdulaziz bin Salman highlighted OPEC+’s capacity to react swiftly to market uncertainties during a gathering in Russia. They proposed that if market conditions demand it, voluntary increases in output might be stopped or reversed. Rather than pointing to underlying supply-demand problems, Novak blamed the recent price decline on speculative factors and a misreading of the agreement.
Analyst Opinions :
The founder and CEO of Rystad Energy, Jarand Rystad, stated that OPEC+ is probably going to keep controlling the market well, but that additional cuts might be required if demand marginally declines.
He pointed out that, in terms of US dollars per barrel, the mid 80s and high 70s represent the ideal price range for OPEC+. Although some Russian oil shipments have decreased as a result of sanctions and drone attacks, the overall market impact is still manageable.
Effects of Interest Rate Reductions :
The European Central Bank (ECB) reduced interest rates for the first time since 2019 on Thursday, sparking rumours among analysts that the US Federal Reserve would do the same. Reduced interest rates typically increase the demand for oil by lowering borrowing costs and promoting economic growth.
Future Information and Market Attitude :
On Friday, market players will be eagerly observing the release of Chinese commodity trade data. The significance of this data in offering guidance for future market moves was underlined by analysts at ANZ Research. China is the world’s second-largest oil consumer, and its demand trends are critical to understanding.
In conclusion :
the main variables affecting oil prices at the moment are the strategic adaptability of OPEC+ and possible reductions in global interest rates. Economic policy actions and supply management strategies, along with careful observation of demand indications from significant customers such as China, continue to impact market dynamics.