Oil prices edged higher on Monday after top exporters Saudi Arabia and Russia reaffirmed their commitment to extra voluntary oil supply cuts until the end of the year.
Brent crude futures settled 29 cents, or 0.34 per cent, higher at $85.18 a barrel, while U.S. West Texas Intermediate crude was up 31 cents, or 0.4 per cent, at $80.82.
Saudi Arabia confirmed on Sunday it would continue its additional voluntary cut of 1 million barrels per day (bpd) in December to keep output around 9 million bpd, a ministry of energy source said.
Russia also announced it would continue its additional voluntary cut of 300,000 bpd from its crude oil and petroleum product exports until the end of December.
“The announcement shows that Saudi has its shoulder to the wheel as it looks to tighten markets and increases prices,” John Kilduff, partner at Again Capital LLC in New York.
The cuts could be extended into the first quarter of 2024 because of “seasonally weaker oil demand at the start of every year, ongoing economic growth concerns and the aim of producers and OPEC+ to support the oil market’s stability and balance,” said UBS strategist Giovanni Staunovo.
Oil prices rebounded after both benchmarks lost about 6 per cent in the week to Nov. 3, as supply concerns driven by Middle East tensions eased.
U.N. agency leaders demanded a humanitarian ceasefire on Monday, a month into the war in Gaza, as health authorities in the enclave said the death toll from Israeli strikes now exceeded 10,000.
A weaker dollar also helped oil prices. The dollar index fell as low as 104.84, the weakest since Sept. 20. A weaker dollar boosts demand for crude purchases by holders of foreign currency.
However, an easing of crude throughput at Chinese and U.S. refineries hurt prices.
Refinery runs are easing at Chinese refineries from record levels in the third quarter because of eroding profit margins and a scarcity of export quotas to the end of the year, traders and industry consultants told Reuters.
Meanwhile, U.S. crude oil refiners this quarter will pull back from red-hot summer run rates as weak gasoline margins and plant overhauls cool operating goals, according to company statements and oil analysts.
Investors will be watching for further economic data from China on Tuesday following weak October factory data last week.
Macroeconomic concerns persist in Europe, where Purchasing Managers’ Index (PMI) data showed the downturn in euro zone business activity accelerated in October as demand weakened further.
The Bank of England Chief Economist Huw Pill said it might wait until the middle of next year before cutting interest rates from their current 15-year high. Lower borrowing cost is likely to boost spending and demand for crude oil.