Oil gains more than 2.5% as OPEC+ commits to output cuts

Oil drilling rigs

Oil closed higher today, July 5, as markets assessed the extension of supply cuts by the OPEC+ group.

Brent crude futures contracts for September delivery rose 2.7%, or $2, to close at $76.65 a barrel.

West Texas Intermediate (WTI) crude for August delivery gained 2.85%, or $2, to record $71.79 a barrel.

At the 8th OPEC International Seminar, Saudi Energy Minister Prince Abdulaziz bin Salman said that the Russian-Saudi cooperation on oil is still strong within the framework of OPEC+. He added that the group will do everything necessary to support the market.

Saudi Arabia, the world’s largest oil exporter, announced earlier that it would extend its voluntary production cut of one million barrels per day until August. Russia and Algeria also reduced their production levels in August by 500,000 barrels per day and 20,000 barrels per day, respectively.

Meanwhile, Morgan Stanley in a note amended its forecast for oil prices. It expects Brent crude to reach $75 instead of $77.5 per barrel in Q3 2023. It also lowered its Q4 forecast from $75 to $70.

According to Bloomberg's calculations, Russia's revenues from crude oil and petroleum products – which account for more than 76% of hydrocarbon revenues – fell by nearly a tenth, to 402.8 billion rubles, coinciding with lower prices.

Separately, the American Petroleum Institute report on oil inventories is expected to be released later today, and the US Energy Information Administration is scheduled to release official data for inventories on July 6.