The oil market reacted with a temporary jump in early Monday trading to the news that Saudi Arabia was surprisingly cutting daily production by another million barrels — to its lowest level in several years.
"We will do everything necessary to stabilize this market," said Energy Minister Prince Abdulaziz bin Salman, referring to the recent drop in prices. Russia pledged no further tapering over the weekend during talks within OPEC+. The United Arab Emirates secured a higher funding rate for 2024.
The US oil grade WTI rose by almost 4.6% to 75.06 dollars per barrel at times. At 6:59 a.m. CEST, however, the barrel cost only 72.75 dollars, 1.4% more than on Friday evening. North Sea oil was recently 1.3% firmer at 77.13 dollars per barrel, after a price increase of 3.4% at times.
The tapering is more of a hedge to the downside than a driver of a sustained rally, said Vivek Dhar, director of the mining and energy commodities analysis division at the Commonwealth Bank of Australia. On the market, the weak economic outlook could well come back into focus.
New York oil futures prices slumped 11 percent last month as demand concerns, particularly related to China, weighed on the market. Most market observers had expected OPEC+ to leave output unchanged.
"Saudi Arabia would ideally want prices to be above $80 a barrel," Vandana Hari, founder of analyst firm Vanda Insights, told Bloomberg TV, referring to the Brent oil price. If the health of the global economy falters, short sellers "will be back in no time," she predicts.