Oil prices stabilize amid Saudi cuts and pessimistic economic expectations

Oil prices stabilized on Friday as investors weighed the impact of both concerns about the state of the Chinese economy and supply cuts from Saudi Arabia and Russia.

The two benchmark crude oils reached their highest levels in ten months this week after Saudi Arabia and Russia extended their voluntary cuts by a total of 1.3 million barrels per day until the end of the year.

However, concerns about the Chinese economy, which is key to supporting oil demand through the rest of the year, frustrated markets due to the slow recovery from the pandemic, while pledges of further stimulus policies fell short of expectations.

Brent crude futures fell seven cents to $89.85 per barrel by 0826 GMT, and US West Texas Intermediate crude futures fell 23 cents to $86.64.

Priyanka Sachdeva, chief market analyst at Philip Nova, said that the difficult economic recovery in China and the rise in the dollar are affecting prices.

Investors expect US interest rates to remain at their highest levels in 20 years, which pushed the dollar index to its highest level in six months this week, increasing the cost of buying crude in other currencies.