Oil prices gained more than 5% during the week ending Aug. 26, over looming supply concerns as Saudi Arabia signaled possible output cuts due to extreme market volatility and with signs of rebounding oil demand in the US, the world’s largest oil consumer.
Brent crude was trading at $101.02 per barrel at 1115 GMT on Friday, posting a 5.28% rise from the Monday session that opened at $95.95 a barrel.
American benchmark West Texas Intermediate (WTI) registered at $93.81 per barrel at the same time on Friday, increasing 4.64% relative to the opening price of $89.65 a barrel on Monday.
Oil prices started the week on Monday, clawing back some of the previous week's gains over the double whammy of increasing demand woes and the rising dollar value, discouraging market investors trading in more expensive US dollar-indexed oil.
Saudi Arabia’s Energy Minister Abdulaziz bin Salman warned on Monday that OPEC+ could cut production to ensure market clarity if needed “as has been clearly and repeatedly demonstrated in 2020 and 2021”.
Prices increased on Tuesday over looming supply concerns as Saudi Arabia signaled possible output cuts if required amid extreme market volatility. Later in the day, Brent crude rose to over $100 a barrel, while WTI traded over $94 per barrel.
As the extremely volatile paper oil market entered a vicious circle, Salman said it could negatively impact the operation of oil markets, energy commodities and other commodities creating new types of risks and insecurities.
He relayed that OPEC+ is working on a new agreement beyond 2022 and on production cuts, as part of the current deal is scheduled to end in September 2022.
The upward price movement continued over the week and oil prices edged higher due to demand recovery in the US and as investors closely monitored reports on whether the de facto leader of the OPEC+ group, Saudi Arabia, will decrease output.
Meanwhile, experts await US Federal Reserve Chairman Jerome Powell's speech for clues on rate hikes to combat inflation due later in the day.