Oil traded near $76 a barrel as traders assessed the latest efforts from OPEC+ linchpins Saudi Arabia and Russia to prop up prices by curbing supply.
(Bloomberg) — Oil traded near $76 a barrel as traders assessed the latest efforts from OPEC+ linchpins Saudi Arabia and Russia to prop up prices by curbing supply.
Brent climbed 1.7% in London, though 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 that was widely expected by traders. Russia announced a reduction in exports and output, while Algeria planned to make more modest curbs.
Prices have been volatile since the announcements, though Tuesday’s gain offered a more positive outlook for producers. In addition to renewed gains in headline prices, there are also 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.
“Oil is rebounding after yesterday’s weakness as the latest move from Saudi Arabia and Russia is being re-assessed,” PVM Oil Associates analyst Tamas Varga said in a note. “The current balance suggests a massive supply deficit in coming months if these cuts are implemented.”
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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