Oil holds breath ahead of OPEC+ supply cut expectations

Oil prices remained constant on Monday, with predictions that major producers would keep supply tight, as hopes grew for the Federal Reserve to keep interest rates unchanged in order to keep the US economy from slowing.

By 1110 GMT, Brent crude futures had risen 5 cents to $88.60 per barrel. October West Texas Intermediate crude (WTI) futures in the United States increased 2 cents to $85.57 per barrel.

After two weeks of losses, both contracts closed last week at their highest in more than a half-year.

Saudi Arabia is set to extend a voluntary 1-million-barrel-per-day (bpd) decrease until October. Previous statements on Saudi Arabia’s voluntary cut extension occurred ahead of the country’s official selling prices, which are usually released in the first week of the month.

Russia has already announced September export cutbacks of 300,000 bpd, following an August drop of 500,000 bpd.

On Thursday, Russian Deputy Prime Minister Alexander Novak stated that Russia has reached an agreement with partners in the Organisation of Petroleum Exporting Countries on the criteria for sustained export cuts.

This week, an official announcement detailing the projected cuts is expected.

In the United States, job growth accelerated in August, but the unemployment rate rose to 3.8%, and wage gains slowed, implying a cooling labour market and reinforcing views that the Federal Reserve will not weaken the economy more by hiking interest rates this month.

Manufacturing activity in China unexpectedly increased in August, according to a PMI survey, alleviating some concerns about the world’s top oil importer, whose beleaguered property sector has dragged on its economy since emerging from the COVID-19 epidemic.

Investors were encouraged by Beijing’s economic stimulus measures last week, which included deposit rate cuts at some of the top state-owned banks and an ease in home buyer borrowing regulations.