Oil rises as supply cuts extend

Oil tested its highest level since November after OPEC+ leaders extended supply cuts. Oil is trading near its highest level since November after OPEC+ leaders Saudi Arabia and Russia announced they would extend supply cuts through the end of the year, tightening the global market. U.S. crude traded around $87 a barrel after the dual announcements on Tuesday, sending it up 1.3%. Investors had anticipated the volume of the cuts, but their duration was unexpected. The strategy by Riyadh and Moscow will help further reduce inventories while pushing the market’s key timeframes back, a bullish pricing pattern. The spread between the two nearest December contracts for U.S. crude has widened to its widest level since mid-2022. Oil rose sharply this quarter after the Community of Petroleum Exporting Countries and its allies agreed to group-wide supply cuts that were later supplemented by additional voluntary cuts. The output curbs come as the International Energy Agency forecasts global crude consumption is running at a record pace. “Further restrictions on oil supply should keep oil prices well supported,” analysts including Adelaide Timbrell of ANZ Group Holdings Ltd. said in a note. “The market is likely to see large draws in inventories as a result of the curbs on output.” Goldman Sachs said in a report that the OPEC+ moves posed upside risks to the price outlook. The bank’s analysts outlined several scenarios, including one that sees Brent earnings rise above $100 a barrel, but they stressed that wasn’t a fundamental case.