(Bloomberg) -- Oil headed for the biggest weekly gain since early March as OPEC+ put the market on course for further tightening ahead of winter.
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West Texas Intermediate futures traded near $89 a barrel on Friday and are up around 11% for the week. Time spreads were signaling supply scarcity even before the producer alliance announced its biggest output cut since the start of the pandemic, a move that's set to squeeze the market even more.
The tightening outlook halted the slide in oil prices, which have been weighed down by concerns over a global economic slowdown and aggressive rate hikes by central banks. Russia also 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," Australia & New Zealand Banking Group Ltd. analysts including Daniel Hynes said in a note. "Sentiment was already bearish in anticipation of a weakening global economy, and this decision should further tighten the market."
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.
US President Joe Biden expressed disappointment in the decision to cut output, while top energy adviser Amos Hochstein said the news had a smaller price impact than the White House had expected. Still, banks from Morgan Stanley to Goldman Sachs Group Inc. expect Brent to advance back to $100 a barrel.
The Organization of Petroleum Exporting Countries and its allies plan to reduce output by 2 million barrels a day from November. However, Saudi Arabia's oil minister said the real-world cut will likely be around 1 million to 1.1 million because some members are pumping well below their quotas.
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