Oil prices increased in early trade on Tuesday as concerns arose about a supply deficit due to weak shale output in the U.S. coupled with extended production cuts by Saudi Arabia and Russia. U.S. West Texas Intermediate crude futures rose 1% to $92.38, just below a 10-month high, while global oil benchmark Brent crude futures rose 0.3% to $94.70 a barrel.
U.S. oil output from top shale-producing regions is expected to reach its lowest level since May 2023 in October, falling for three consecutive months, according to the U.S. Energy Information Administration. These estimates follow the decision by Saudi Arabia and Russia to extend their supply cuts of 1.3 million barrels per day until the end of the year.
Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, defended the cuts, stating that international energy markets require regulated supply to limit volatility. He also noted uncertainty concerning Chinese demand, European growth, and central bank actions to address inflation.
The increase in oil prices marks the fourth consecutive session of gains and comes after three weeks of consistent price growth. The weak shale output in the U.S. has contributed to concerns about a potential supply deficit, thereby driving up prices. It remains to be seen how these factors will impact the overall energy market and whether further actions will be taken to regulate supply and stabilize prices.
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– U.S. Energy Information Administration (EIA)