Oil prices rose nearly 1% to a nine-month high on Friday

NEW YORK – Oil prices rose nearly 1% to a nine-month high on Friday on rising U.S. crude futures and concerns about tight crude supplies after Saudi Arabia and Russia extended supply curbs this week.

Brent futures were up 73 cents, or 0.8%, at $90.65 a barrel, while U.S. West Texas Intermediate (WTI) crude was up 64 cents, or 0.7%, at $87.51 dollar.

Both crude benchmarks remained in technically overbought territory for a sixth straight day, with Brent settlement the highest since November 16. WTI settlement was the highest since September 6, which was the highest since November.

For the week, both benchmarks rose about 2%, following last week’s gains of about 5% for Brent and about 7% for WTI.

“Oil prices continue to trade on the supply side. No one doubts that OPEC+ will keep this market tight into the winter,” said Edward Moya, chief market analyst at data and analytics firm OANDA.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia are collectively known as OPEC+.

OPEC members Saudi Arabia and Russia this week extended their voluntary supply cuts of 1.3 million barrels a day until the end of the year.

Saudi Arabia is likely to struggle to end cuts at the end of the year without triggering a drop in prices, analysts at Commerzbank (ETR:CBKG) said in a note.

In the U.S., energy firms added one oil rig this week, the first weekly increase since June, according to energy services firm Baker Hughes.

Rising US diesel prices also supported oil prices, with heating oil futures up about 3%.

Energy traders noted that seasonal refinery maintenance in Russia in September was likely to reduce diesel exports, but could lead to an increase in crude oil exports.

Separately, Venezuelan President Nicolás Maduro arrived in China on Friday for his first visit in five years. China is the world’s largest oil importer and OPEC member Venezuela has the world’s largest proven oil reserves.

The oil market is still worried about the outlook for demand in China, which is stagnant after the pandemic and stimulus promises have fallen short of expectations.

China has been inundated with the heaviest rain since records began in Hong Kong 140 years ago, killing two people and injuring more than 140, state media said.

Data on Thursday showed that overall Chinese exports and imports fell in August as falling overseas demand and weak consumer spending weighed on businesses.

In Germany, the lower house of parliament approved a bill that could reduce future demand for fossil fuels by phasing out oil and natural gas heating systems.

Oil traders are also watching whether central banks in the US and Europe will continue to fight inflation by raising interest rates.

“Riyadh (Saudi Arabia) is acutely aware of the tightrope it is walking between tightening the market and undermining any progress central banks have made in taming price-driven inflation,” said John Evans of oil broker PVM.

A rise in interest rates can slow economic growth and reduce demand for oil.

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