Oil headed for a sixth straight weekly gain, the longest winning streak in more than a year, after OPEC+ heavyweights Saudi Arabia and Russia extended production cuts into next month and US stockpiles sank by a record.
West Texas Intermediate climbed toward $82 a barrel, taking gains over the six-week span to about 18%. Saudi Arabia said Thursday it would extend its unilateral 1 million barrel a day oil output cut into September, and that the move could be prolonged further or even deepened. Russia will also extend its cut into next month, while tapering the size of the supply reduction.
The US, meanwhile, posted the largest-ever drawdown of crude inventories last week as holdings contracted by more than 17 million barrels, providing further evidence of a tightening market. That helped WTI’s timespreads to strengthen, with the gap between the two nearest December contracts rising toward $6 a barrel in backwardation from about $3 a month ago.
Crude’s rally means futures in New York have now erased all their year-to-date losses amid rising expectations — including from Bank of America Corp. — that the US won’t slide into recession despite the Federal Reserve’s rate-hiking campaign. Still, doubts about China’s lackluster recovery remain a challenge for the outlook despite Beijing’s efforts to revive growth.
To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.
