Saudi Arabia Commits to Extended Production Cut, Russia Reduces Oil Exports; US Manufacturing Activity Drops
Aa
Share
- Saudi Arabia commits to extending voluntary cut of 1 million bpd
- Russia to reduce oil exports by 500K bpd
- US Manufacturing Activity drops the most in 3 years
Oil
The bottom is in place for oil after the Saudis and Russians play nice. The oil market got a boost after the Saudis extended their production cuts and Russia surprised everyone with an export cut announcement of 500,000 bpd. The Saudi extension should have been expected by everyone, but the Russian export cut news did surprise many energy traders. Russian oil exports hit pre-war levels in April and Asian demand kept on taking advantage of the Russian discounts. Russia has hardly been crippled by Western sanctions as they have been able to sell its crude to India, China, and Turkey.
WTI crude seems poised to make some higher lows here even if a stronger dollar emerges on fears the Fed will be taking rates much higher. OPEC+ is saying what it needs to keep supplies tight, whether they, the Russians follow on those pledges is another story. The global growth outlook won’t be improving anytime soon given the latest global PMIs, but the US and China outlooks should remain upbeat for the next few months. US economic resilience will likely remain before we see the slowdown and China will steadily provide more support to their economy.
Given the shortened trading day, oil price gains might be limited until after the July 4th holiday. WTI crude pared back some gains following a softer ISM manufacturing report.
