Oil futures: Crude higher as Saudi, Russia confirm cuts
Quantum Commodity Intelligence – Crude oil futures Monday were higher after OPEC+ kingpins Saudi Arabia and Russia confirmed cuts would last until at least the end of the year, prompting speculation the reductions could be extended into 2024.
Front-month Jan23 ICE Brent futures were trading at $85.65/b (1900 GMT), compared to Friday's settle of $84.89/b.
At the same time Dec23 NYMEX WTI was trading $81.37/b versus Friday's settle of $80.51/b.
Saudi Arabia reiterated over the weekend it would extend its voluntary crude oil production cut of 1 million bpd until the end of the year, while Russia also confirmed it was reducing exports by 300,000 bpd until December.
Although nothing new in the confirmation, the announcement prompted speculation that OPEC+ would extend current cuts when it meets later this month.
Meanwhile, fears of the Israel-Hamas conflict spreading around the region eased after Hezbollah leader Hassan Nasrallah said Friday that the Iran-backed group has no intention of launching a full-scale war against Israel, although it would keep Israeli forces occupied in the north.
However, analysts said the prospect of supply disruptions cannot be entirely dismissed, given the regional importance for oil markets.
"The oil market remains undersupplied, and in our opinion it is still too early to completely price out any geopolitical risks," said Carsten Fritsch of Commerzbank.
Oil markets also found support as Dollar Index consolidated at around 105 points, having reached yearly highs above 107 points last week.
Meanwhile, Saudi Arabia kept its OSP for flagship Arab Light unchanged at Platts Dubai/DME Oman +$4/b, at the high end of expectations, which was seen as an indicator Saudi does not expect any issues in placing barrels.
Elsewhere, traders trimmed bullish bets on crude and diesel last week, led by a sharp fall in speculative positioning on WTI, as geopolitical risk from the Israel-Hamas conflict fades and attention turns back to oil fundamentals.
