Saudi Arabia’s pledges of voluntary output cuts and the earlier decline in US oil inventories have continued to boost energy markets, bringing crude prices to the highest levels since February 2020.
Futures for international benchmark Brent and American West Texas Intermediate (WTI) saw another consecutive gaining session on Friday, rising around 1.7 percent on the day. Both saw the highest level in almost a year and were on track for six-percent weekly gains, with Brent climbing over $55 per barrel and WTI trading at around $51.5.
The energy markets were driven by the additional Saudi cuts, announced by the kingdom earlier this week. The world’s largest oil exporter pledged to reduce its oil output by one million barrels per day (bpd) in February and March on top of the caps under the OPEC+ deal. Riyadh’s cuts, which are equivalent to about one percent of global supply, were supported by some other signatories.
While some oil exporters, such as Russia, were allowed to slightly increase production in the coming months, the OPEC+ quotas remain in place. They stand at 7.2 million bpd for January, and will be reduced to 7.125 million bpd and 7.05 bpd in the next two months.
In addition to supply cuts from OPEC and its allies, US Energy Information Administration (EIA) data shows that the country’s crude oil inventories decreased by eight million barrels in the week ending January 1. The drop was above market expectations, with IHS Markit analysts having anticipated a decline of 1.2 million, while analysts polled by Reuters predicted an inventory draw of 2.1 million barrels.
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