Oil prices climb as OPEC+ reassures markets European Central Bank cuts interest rate

CNBC carries an article about oil prices climbing after OPEC+ members Saudi Arabia and Russia indicated readiness to pause or reverse output agreements, Caliber.Az reprints the article.

Oil prices rose on June 7, continuing to climb after OPEC+ members Saudi Arabia and Russia indicated readiness to pause or reverse output agreements and as an interest rate cut in Europe raised the prospect of a similar US move.

Brent crude futures rose 16 cents or 0.2 per cent to $80.03 per barrel and US West Texas Intermediate crude futures rose 16 cents or 0.2 per cent to $75.71 as at 0007 GMT.

Prices rallied on June 6 when Saudi Arabia and Russia tried to reassure markets on supply agreements. However, they are heading for a weekly loss after analysts saw OPEC+ meeting as indicating rising supply which is bearish for prices.

OPEC+, the Organisation of the Petroleum Exporting Countries and allies including Russia, agreed to extend most production cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually.

Attending an event in Russia on June 6 along with Russian Deputy Prime Minister Alexander Novak, Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ can pause or reverse voluntary output increases if it decides the market is not strong enough.

“We are ready to react quickly to market uncertainties,” Novak said at the event, adding the price drop after the weekend meeting was caused by misinterpretation of the agreement and “speculative factors.”

Jarand Rystad, founder and chief executive of Rystad Energy consultancy, told Reuters that OPEC+ would likely persist in managing the market but “further cuts may be necessary as demand softens slightly while the supply remains sufficient unless adjustments are made.”

“The sweet spot for OPEC+ lies within the price range we’ve witnessed — low 80s to high 70s (in US dollars per barrel). Despite some Russian volumes being cut from the market due to sanctions and drone attacks, the impact remains manageable,” he said.

The European Central Bank went ahead with its first interest rate cut since 2019 on June 6, prompting analyst expectations of the US Federal Reserve following the suit. Lower rates boost oil demand.

On June 7, market participants will be awaiting the release of Chinese commodity trade data for indication of demand direction in the world’s second-biggest oil consumer after the US, ANZ Research analysts wrote in a client note.