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Oil prices rise as Saudi Arabia and Russia clarify their stance on increasing production

by xyonent
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Oil futures rose on Friday morning after Saudi Arabia and Russia said they may pause or reverse voluntary production increases if they believe the market is not strong enough.

As of 9:53 a.m. Friday, August Brent crude futures were up 0.20% to $80.03, while July WTI (West Texas Intermediate) crude futures were up 0.26% to $75.75.

June crude oil futures were trading at Rs 6,327, up 0.02 percent against the previous close of Rs 6,326, while July crude oil futures were trading at Rs 6,323, up 0.02 percent against the previous close of Rs 6,322, at opening morning trade on Friday on the Multi Commodity Exchange (MCX).

  • Also read: Oil Today: Brent Crude Oil Slightly Lower as Market Awaits Key Data from the US

Moves to phase it out

Saudi Arabia’s Energy Minister Prince Abdul Aziz bin Salman, speaking at an event in Russia, said the Organization of the Petroleum Exporting Countries (OPEC+) and its allies could pause or reverse voluntary production increases if they decided markets were not strong enough.

Russian Deputy Prime Minister Alexander Novak, who attended the event, said the country was “ready to react quickly to market uncertainties.”

OPEC+ announced production cuts of about 5.8 million barrels per day through 2025 on Sunday. The cuts include voluntary cuts of 3.66 million barrels per day that expire at the end of 2024. Further cuts of about 2.2 million barrels per day through the end of September were also part of the announcement.

OPEC+ decided to maintain the production cuts of 3.6 million barrels per day until the end of 2024, but announced its decision to phase out the production cuts by 2.2 million barrels per day between October 2024 and September 2025.

The decision sparked market concerns about an oversupply caused by increased production, sending crude oil prices to their lowest in four months.

But an OPEC+ media statement on Sunday also made clear that the monthly production increases could be suspended or withdrawn depending on market conditions.

EU interest rate cuts

Meanwhile, China’s trade surplus increased in May. According to the General Administration of Customs of China, the country’s trade surplus increased to $82.62 billion in May 2024 from $65.55 billion in May 2023. The market had expected the trade surplus to be $73 billion in May 2024.

Exports grew much faster than imports in May. Exports increased 7.6%, beating expectations of a 6% increase, while imports rose 1.8%, below market expectations of a 4.2% increase. China’s trade surplus with the United States increased to $30.8 billion in May from $27.2 billion in April. China is the world’s leading consumer of crude oil.

  • Related article: Oil prices edge down as industry data shows US inventories rise

The European Central Bank announced an interest rate cut on Thursday, the first in five years since 2019. Markets are awaiting the outcome of the Federal Reserve’s meeting next week, as a rate cut in the United States would boost demand for commodities such as crude oil.

Jeera dip, castor oil up

Mentha oil futures for June delivery were trading at Rs 927.90 on MCX, up 1.30 per cent against the previous closing price of Rs 916.

On the National Commodity and Derivatives Exchange (NCDEX), July Jeera contract was trading at Rs 29,325, down 0.96 per cent against the previous day’s closing price of Rs 29,610.

July castor seed futures were trading at Rs 5,790 on the NCDEX, up 0.16 per cent from the previous close of Rs 5,781.

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