Futures Movers: Oil prices look to extend their rise after 4 consecutive weekly gains

Supply cuts by Saudi Arabia and Russia have helped underpin those expectations.

The United Arab Emirates Energy Minister Suhail al-Mazrouei reported stated that current OPEC actions are sufficient to “balance the market” and that if any further action is required it can be addressed at the next meeting, StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Monday’s newsletter.

“The UAE and Saudi’s relationship has been in question in the recent past but after the adjustment of UAE’s production quota and the Saudi’s full responsibility of the latest production cut, it appears the two major oil producing countries are on the same page,” they said.

The latest round of supply cuts do “appear to have tightened the oil market,” and oil prices have rallied almost $8 a barrel since the beginning of July, the StoneX team said.

Traders are also looking ahead to the “host of central bank decisions during the week, where the main attention will be on the U.S. Federal Reserve,” said Jameel Ahmed, chief analyst at GTC, a trading brokerage based in Dubai.

The U.S. central bank is expected to indicate that interest rates in the United States have peaked following another interest-rate hike, but “expectations that China, through the People’s Bank of China, will unleash stimulus to support the Chinese economy (in turn supporting global growth prospects) seems to be encouraging traders to keep hold of their oil positions,” he said in emailed commentary.

The Fed will conclude its policy meeting on Wednesday, while policy decisions will be delivered by the European Central Bank on Thursday and the Bank of Japan on Friday.

See: Everyone thinks the Fed’s rate hike this week will be the final one — except the Fed

“As we approach the second half of 2023 trading and with global economic health concerns unlikely to go away, while central banks across developed markets are resistant to reduce interest rates with inflationary pressures still historically high, we would need a complete rebound in global economic sentiment into optimism to maintain that oil should remain above $80 over the longer-run,” said Ahmed.

Also read: Stocks are making a run for record territory. Will the Fed end its rate hikes anyway?