Summary:
Oil rose as OPEC+ planned deeper cuts to boost prices. Improved supply and an economic slowdown led to a four-week decline.
Oil extended its gains as OPEC+ was expected to deepen supply cuts to shore up weak prices. Easing supply concerns and signs of economic slowdown caused a four-week decline.
Both Brent and WTI contact closed 4% higher on Friday. OPEC+ is set to consider whether they should make additional cuts when meeting later this months, according to three sources.
Prompt inter-month spreads for Brent and WTI slipped into contango last week, signalling sufficient supply. Non-OPEC countries are helping balance oil markets by opening their taps.
US oil producers have been cutting the number of active drilling rigs for nearly a year, but the oil rig count last week rose by six, the most since February, Baker Hughes said.
The IEA said the US is forecast to increase output by 1.4 million bpd for 2023. However, the latest plunge in prices may have been overdone particularly after the more sanctions on Iran is more likely than less.
Iran proxies have been attacking US forces ever since Israel invaded Gaza. Teheran and its proxies in the Middle East have been dealing with a spate of sanctions for a long time.
Brent crude has been back above $80 after a strong rally. RSI indicates it is now overbought, so further gains could be limited unless OPEC+ bolsters expectations for deeper cuts.
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