Key Takeaways:
- The oil price increased after Saudi Arabia announced it would prolong voluntary output reductions by one more month.
- Moscow also announced a reduction in crude shipments of 500,000 barrels per day.
- For the first time since June 22, Brent Crude crossed over its 50-day moving average.
WISCONSIN (CoinChapter.com) — The oil price increased after Saudi Arabia announced it would prolong voluntary output reductions by one more month, followed by fellow OPEC+ producer Russia, promising to curb shipments.
Saudi Arabia Continues Its Voluntary Output Reductions
Saudi Arabia’s capital, Riyadh, is already lowering its supply by an additional 1 million barrels daily and will now do so through August.
The move received a favorable response from the world’s oil markets. Saudi Arabia is attempting to balance the market with this voluntary drop after over a year of bearing the brunt of the COVID-19 outbreak.
Russia Cuts Exports in the Same Manner
Additionally, Moscow made its declaration.
Russia announced a reduction in crude shipments of 500,000 barrels per day over the next month. The decrease in Russian oil exports is anticipated to constrict the oil market further, helping to balance the surplus brought on by a drop in demand amid the current global health crisis.
Although the decline in exports is anticipated to have a major short-term impact on Russia’s oil revenue, the long-term advantages look good. The action is anticipated to raise oil prices around the world, which will ultimately help Russia and other oil-producing countries in the long run.
Brent Crude Oil Futures Exceeds 50-Day Moving Average.
The moves in Riyadh and Moscow may also tighten the crude market and encourage technical purchasing. For the first time since June 22, Brent Crude crossed over its 50-day moving average, a mark it has failed to surpass lately.
When combined with Saudi Arabia’s and Russia’s output and export cuts, Brent Crude breaching above its 50-day moving average points to a promising near-term future for the market.
Brent might spark more purchasing if it holds over this level, driving higher prices.
