Oil prices gained nearly 1% in early Asian trading on Tuesday as markets weighed the impact of fresh output cut from Saudi Arabia and Russia against growing concerns about global economic growth.
By 11:43 a.m. Bangkok time, Brent oil futures rose 0.51% to $75.03 per barrel, while West Texas Intermediate crude futures climbed 0.53% to $70.16 per barrel. After a day of wild swings, both contracts ended Monday near their lows.
Saudi Arabia said on Monday it will extend its voluntary production cut of one million barrels per day for another month, into August, resulting in an average output of approximately 9 million barrels per day for the month of August 2023.
Meanwhile Russia said it will trim its oil exports by 500,000 bpd.
However, grim factory activity figures from the United States, Germany, and China on Monday mostly offset optimism over the supply reduction. With these figures in hand, it’s more likely that petroleum consumption will be dampened by the worsening of global economic conditions this year.
The next summit of the Organization of the Petroleum Exporting Countries and its allies on Wednesday and Thursday continues to be a major event in the oil market.
In an effort to keep oil prices stable, OPEC has reduced output twice this year. With worries over a worldwide economic slowdown outweighing any signals of tightening supplies, both cuts had virtually little effect on oil prices.