Russia News and EIA Data Propel Crude Oil Price Upward as it Targets New Peaks

1 September 2023, Friday
Russia News and EIA Data Propel Crude Oil Price Upward as it Targets New Peaks

The Crude Oil Price Rises as Russia Extends Production Cuts


Russia to Extend Production Cuts


Reports have emerged that Russia will extend cuts to oil production, causing the crude oil price to climb higher. Deputy Prime Minister Alexander Novak has announced that Russia will announce new parameters of a deal with its OPEC+ partners next week.


Drop in Stockpiles


The latest inventory data shows that China and India imported less oil in July. However, the US Energy Information Agency (EIA) weekly petroleum status report revealed a significant drop in stockpiles. For the week ended August 25th, there was a decrease of -10.584 million barrels, which was much lower than anticipated.


Positive Signs for Crude Oil Demand


The backwardation between the front two WTI futures contracts suggests that demand for crude oil in the US is strong. This supports the case that the US market is robust for now.


Market Indicators


The OVX index, which measures volatility in the WTI oil price, is currently at its lowest level since 2019. This may indicate that the market is not concerned about the increase in oil prices.


Current Oil Prices


At the start of trading on Friday, the WTI futures contract is priced slightly above US$83.50 per barrel, while the Brent contract is trading near US$86.80 per barrel.


Upcoming Events


The release of the US non-farm payrolls (NFP) report later today could impact oil price volatility. Economists are forecasting that 170k jobs were added in August, with the unemployment rate remaining steady at 3.5%. Additionally, the weekly Baker Hughes rig-count report is expected to receive attention.