Oil headed for the biggest weekly gain since April as Russia signaled it would extend export curbs and China fired another salvo of state support to bolster the economy in the world’s largest crude importer.
West Texas Intermediate was steady below $84 a barrel, about 5% higher this week. Moscow has agreed with OPEC+ partners on further cuts to exports, with details to be released next week, according to Deputy Prime Minister Alexander Novak. Traders expect a similar announcement from Saudi Arabia.
Amid persistent investor concerns over the growth outlook in China, Beijing has intensified efforts to stimulate its economy and support the currency. Among the latest moves, the central bank will trim the amount of foreign-currency deposits banks are required to hold as reserves for the first time this year.
Oil’s surge this week helped the US benchmark to cap a third consecutive monthly gain, the longest winning run since mid-2022. Additional support for crude prices has come from speculation that the Federal Reserve may not need to deliver further interest rate hikes as inflation cools off.
“The oil market is still trading on the logic of tight supply,” said Gao Mingyu, Beijing-based chief energy analyst at SDIC Essence Futures Co., citing the moves by Moscow and OPEC+ ally Riyadh. There were also now some positive signs in China’s economy, including the property sector, according to Gao.
With the Organization of Petroleum Exporting Countries and its allies cutting back on shipments to rebalance the market, US crude stockpiles have been contracting. Government figures this week showed a draw of more than 10 million barrels, which cut holdings to the lowest level since December.
The market’s underlying metrics suggest conditions are tightening. WTI’s three-month spread has widened to more than $2 a barrel in backwardation, a bullish pattern in which prompt contracts command a premium over those further out. That’s the biggest gap since last November.
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