Oil edged higher as traders assessed the latest efforts from OPEC+ linchpins Saudi Arabia and Russia to prop up prices by curbing supply.
(Bloomberg) — Oil edged higher as traders assessed the latest efforts from OPEC+ linchpins Saudi Arabia and Russia to prop up prices by curbing supply.
West Texas Intermediate climbed above $70 a barrel, clawing back some of the 1.2% loss in the previous session even as the cuts were announced. Volumes were subdued due to the July 4 holiday in the US.
In a flurry of announcements Monday, Saudi Arabia said that it will prolong a unilateral 1 million barrel-a-day supply reduction into August, a move traders had widely expected. Russia announced a reduction in exports, while Algeria planned to make more modest curbs.
After an initial jump following the news, prices have so far struggled for meaningful direction. There are however signs of bullishness in the futures curve, with Brent’s nearest timespread closing at its strongest level in about a month on Monday, indicating expectations of tighter supply.
“It was not too surprising that Saudi Arabia decided to roll over its additional, voluntary cuts,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. “Fundamentals are not having as much influence on price direction as one would expect.”
Crude prices are also running up against a major technical hurdle. Brent futures pierced their 50-day moving average on Monday, but failed to close above that level. They’ve generally struggled to move far beyond that marker since prices became rangebound in late April.
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