International oil prices advanced around 3% on Friday and headed for their best weekly gain since March this year, after OPEC decided on Wednesday to make its biggest supply cut since 2020 despite recession concerns. and interest rate increases.
The decline announced by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, comes ahead of a European Union embargo on Russian oil and will cut supply in an already tight market.
Around noon, the price of Brent crude rose 3.80% intraday, reaching a level of 98.01 dollars a barrel. Meanwhile, West Texas Intermediate (WTI) oil from the United States gained 4.14%, at 92.11 dollars a barrel. At the weekly cut, the WTI grew 15.88%, while the benchmark for Great Britain increased 11.43%, its best performance since mid-March 2022.
“Among the key effects of OPEC’s latest cut is a likely return of oil to the $100 level,” said Stephen Brennock of brokerage PVM. “However, gains will be limited by growing economic headwinds,” he added.
Both benchmarks were headed for a second weekly gain and Brent topped a 10% gain this week. The North Sea index remains well below its all-time high of $147 a barrel hit in March after Russia invaded Ukraine.
A drop in the dollar index ahead of Friday’s US jobs report also provided some support for oil, although given the Federal Reserve’s commitment to fight inflation, strategists believe the trend will not last.
Investors are eyeing the US non-farm payrolls report due later on Friday for clues as to how much longer US interest rates will continue to rise.
“OPEC+ showed their cards this week and that will keep oil markets very tight as we head into winter. OPEC+ has done what it takes and is now waiting to see what the reaction of world leaders will be,” said Edward Moya, Senior Analyst at OANDA.
What about other commodities?
The price of precious metals ended the week with a strong boost. Gold was trading at a level of $1,707.95 per ounce, which meant weekly growth of 2.25%, while silver was trading at $20,273 per ounce, up 6.48% from last Friday.
Gold could be vulnerable ahead of next week’s inflation data as Wall Street wanted to see a much fresher non-farm payroll employment report today. “The economy is not falling apart as fast as some traders anticipated,” Moya added.
U.S. soybean futures rose on Friday, with buying offers in the spotlight after prices fell to their lowest level since late July the day before, traders said.
CBOT December corn futures were up 7.25 cents at $6.82 a bushel, and CBOT December soft red winter wheat futures were up 0.25 cents at $8.79 a bushel.
Corn futures also held firm after posting a sharp decline on Thursday, while wheat futures steadied, with attempts to rally held back by concerns over export demand and a firm US dollar.
With information from Reuters