Oil hit new peaks on Wednesday with Brent crude touching the highest price since April, as tighter supply owing to Saudi and Russian output cuts offset concerns over slow demand from China and a report showing rising U.S. crude inventories.
Top exporter Saudi Arabia last week extended its voluntary production cut of 1 million barrels per day for another month to include September, and Russia said it would cut oil exports by 300,000 bpd in September.
“The latest recovery is mainly driven by the pledge of major producers, like Saudi Arabia and Russia, to keep supply subdued for another month,” said Charalampos Pissouros, senior investment analyst at broker XM.
Brent crude was up $1.00, or 1.2%, at $87.17 by 1110 GMT, having touched $87.24, the highest price since April 13. U.S. West Texas Intermediate (WTI) crude gained 80 cents, or 1.0%, to $83.72. The U.S. benchmark touched $84.11, the highest price since November 2022.
Crude posted its sixth consecutive weekly gain last week, helped by a reduction in OPEC+ supplies and hopes of stimulus boosting oil demand recovery in China.
“There is no doubt that there is plenty of momentum here,” said Naeem Aslam, chief investment officer at Zaye Capital Markets. “The clear trend seems to be skewed to the upside.”
On Tuesday, Saudi Arabia’s cabinet said it reaffirmed its support for precautionary measures by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to stabilise the market, state media reported. Some bearish pressure came from American Petroleum Institute (API) figures on Tuesday, which according to market sources showed U.S. crude stocks rose by 4.1 million barrels last week, although gasoline and distillate inventories fell.
Official U.S. Energy Information Administration inventory figures are due to be released at 1430 GMT.
On Tuesday, oil also came under pressure from Chinese data showing crude oil imports in July fell 18.8% from the previous month to their lowest daily rate since January, although they were up 17% from a year earlier