Bloomberg oil gained the biggest weekly gain since March as OPEC put the market on course for further tightening ahead of winter.
West Texas Intermediate futures rose to near $89 a barrel on Friday and are up around 12% for the week. The time spreads signaled supply scarcity even before the producer alliance announced its largest output cut since the start of the epidemic, a move that is set to squeeze the market even more.
Concerns over a global economic slowdown and aggressive rate increases by central banks have weighed down the slide in oil prices. Russia has reiterated this week that it won't sell oil to countries that adopt a US-led price cap, adding to supply uncertainty.
The move by OPEC to cut output could be a turning point for the market, according to analysts from Australia New Zealand Banking Group Ltd. The decision should tighten the market, as the sentiment was already bearish in anticipation of a weaker global economy. Oil consumers have been given some respite by key OPEC member Saudi Arabia, which kept prices for November shipments to Asia steady and lowered those for Europe. Refiners and traders had predicted a hike.
The Organization of Petroleum Exporting Countries and its allies plan to reduce output by 2 million barrels a day from November. Saudi Arabia's oil minister said the real-world cut will likely be around 1 million to 1.1 million because some members are well below their quotas.
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