Oil supply cuts on the part of Russia and Saudi Arabia caused oil prices to rise last November 6th as these two nations reiterated that they would curtail their extra-voluntary oil output till the end of 2023.

In an announcement made on November 5th, Saudi Arabian officials declared that they would reduce its overall December output by one million barrels a day, keeping its total daily output at just nine million barrels.

For its part, Russia is set to continue its voluntary reduction of 300,000 barrels per day in terms of both crude oil and refined petroleum exports. The country intends to go on with this well into the end of the year.

As a result, Brent crude futures were up by 0.34%, settling at $85.18 per barrel. US West Texas Intermediate crude, on the other hand, settled at $80.82, reflecting an increase of 0.4%.

Also, it has not helped that the US dollar index fell to 104,84, its lowest since September 20th of this year. The dollar’s weakness, in turn, fuels the demand for crude among those holding foreign currencies.

Starting the Year With Cuts

It is possible that both nations will continue their production cuts well into the first quarter of the new year. Giovanni Staunovo, a strategist at UBS, explains that this could be because seasonal oil demand usually tends to be weaker at the start of the year. 

Other factors that could influence the decision include current economic concerns and moves on the part of OPEC+ member nations to maintain stability and equilibrium in the global oil market.

For now, crude oil refineries in the United States are set to drop rates which went alarmingly high during the summer months. According to industry analysts, this is mostly due to weaker margins for gasoline, as well as overhauls at processing plants.