Oil prices rise as OPEC+ reassures markets and ECB cuts interest rate

By Katya Golubkova

TOKYO (Reuters) – Oil prices rose on Friday, continuing to rise after OPEC+ members Saudi Arabia and Russia indicated a willingness to pause or reverse production deals and as a cut in interest rates in Europe raised prospect of a similar measure in the USA.

Brent crude futures rose 16 cents or 0.2% to $80.03 per barrel and US West Texas Intermediate crude futures rose 16 cents or 0.2% to $75.71 at 0007 GMT .

Prices rose on Thursday as Saudi Arabia and Russia tried to reassure markets over supply deals. However, they are heading for a weekly loss after analysts viewed Sunday’s OPEC+ meeting as an indication of increased supply, which is bearish for prices.

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, agreed to extend most production cuts until 2025, but left room for voluntary cuts by eight members to be phased out.

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

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

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

“The sweet spot for OPEC+ is within the price range we have been witnessing – low 80s and high 70s (in US dollars per barrel). Although some Russian volumes have been cut from the market due to sanctions and attacks by drones, the impact remains manageable,” he said.

The European Central Bank followed through with its first interest rate cut since 2019 on Thursday, sparking analyst expectations that the U.S. Federal Reserve will follow suit. Lower rates boost oil demand.

On Friday, market participants will await the release of Chinese commodity trade data to indicate the direction of demand in the world’s second-largest oil consumer after the US, analysts at ANZ Research wrote in a note to clients.

(Reporting by Katya Golubkova; Editing by Christopher Cushing)