US Crude Oil Gains on Supply Cuts, Focus Shifts To Holiday Demand

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  • US crude price rises to catch-up with Brent’s Tuesday gains
  • Saudi Arabia, Russia announced fresh supply cuts on Monday
  • Focus shifts to US holiday demand, inventories data
  • US crude inventories fell last week, gasoline rose – API
  • Official EIA inventories data due Thursday

U.S. crude oil gained about 3% on Wednesday, narrowing the price gap with global benchmark Brent in a post-holiday response to supply cuts announced on Monday by Saudi Arabia and Russia, reports The Reuters.

Brent crude futures

U.S. West Texas Intermediate crude (WTI) rose $2 from Monday’s close, or 2.9%, to settle at $71.79 a barrel. Brent crude futures rose 40 cents, or 0.5%, to settle at $76.65 a barrel, after gaining $1.60 a barrel on Tuesday.

There was no WTI settlement on Tuesday because of the U.S. holiday, so trade on Wednesday had it catching up with Brent’s gains the previous day. Both benchmarks hit their highest level in nearly two weeks during Wednesday’s session.

Saudi Arabia, the world’s biggest crude exporter, on Monday said it would extend its voluntary output cut of 1 million barrels per day (bpd) to August. Russia and Algeria, meanwhile, are lowering their August output and export levels by 500,000 bpd and 20,000 bpd respectively.

Russia-Saudi oil cooperation is still going strong as part of the OPEC+ alliance, which will do “whatever necessary” to support the market, Saudi energy minister Prince Abdulaziz bin Salman said on Wednesday.

“The July voluntary cuts and the extension into August should considerably tighten the oil market, but investors will stay on the sidelines until oil inventories will show substantial draws,” said UBS analyst Giovanni Staunovo.

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Source: Reuters