Oil prices climb as OPEC+ reassures markets, ECB cuts interest rate

Prices rallied on Thursday when Saudi Arabia and Russia tried to reassure markets on supply agreements. However, they are heading for a weekly loss after analysts saw Sunday’s OPEC+ meeting as indicating rising supply which is bearish for prices.

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, agreed to extend most production cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually.

Attending an event in Russia on Thursday along with Russian Deputy Prime Minister Alexander Novak, Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ can pause or reverse voluntary output increases if it decides the market is not strong enough.

“We are ready to react quickly to market uncertainties,” Novak said at the event, adding the price drop after the weekend meeting was caused by misinterpretation of the agreement and “speculative factors.”

Jarand Rystad, founder and chief executive of Rystad Energy consultancy, told Reuters that OPEC+ would likely persist in managing the market but “further cuts may be necessary as demand softens slightly while the supply remains sufficient unless adjustments are made.”

“The sweet spot for OPEC+ lies within the price range we’ve witnessed — low 80s to high 70s (in U.S. dollars per barrel). Despite some Russian volumes being cut from the market due to sanctions and drone attacks, the impact remains manageable,” he said.

The European Central Bank went ahead with its first interest rate cut since 2019 on Thursday, prompting analyst expectations of the U.S. Federal Reserve following the suit. Lower rates boost oil demand.

On Friday, market participants will be awaiting the release of Chinese commodity trade data for indication of demand direction in the world’s second-biggest oil consumer after the U.S., ANZ Research analysts wrote in a client note.