Investing.com -- Oil prices rose Thursday, hitting three-week highs on rising expectations of tightening supplies from some of the globe’s largest producers.
By 09:20 ET (13.20 GMT), the U.S. crude futures traded 1.3% higher at $84.69 a barrel, while the Brent contract climbed 1.1% to $87.78.
Both contracts were up more than 3% this week, with the WTI contract in particular benefiting from a tighter outlook for U.S. supplies after data this week showed a substantially bigger-than-expected draw in U.S. inventories.
Top producers set to extend output cuts
Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, is widely expected to announce in the very near future that it plans to extend a voluntary one million barrel per day oil production cut into October.
This was virtually confirmed on Thursday when Russian Deputy Prime Minister Alexander Novak said that Moscow had reached a new deal with its OPEC to further cut supplies, and will outline more reductions in production next week.
“Russia made a voluntary cut to its oil exports of around 500Mbbls/d for August and 300Mbbls/d for September,” analysts at ING said, in a note.
The reductions will likely add to the ongoing supply cuts by the OPEC members and allies, a group known as OPEC+, presenting a tighter supply outlook for the rest of the year.
U.S. unemployment rate ticks higher
Adding to the positive tone was the release of the monthly official U.S, jobs report, which showed that while the world’s largest economy added more jobs than projected in August, wage gains slowed and the unemployment rate unexpectedly ticked higher.
With revisions lower to job gains in the prior months, this tends to point to the Federal Reserve keeping borrowing costs on hold at its next policy meeting later this month, avoiding another hit to U.S. economic activity.
Chinese factory activity grew in August
Earlier in the day, a private survey showed Chinese factory activity unexpectedly grew in August, a private survey showed on Friday, as manufacturers were boosted by an uptick in new orders.
The Caixin data stood in contrast to the official PMI, which suggested a contracting manufacturing sector on Thursday, but still offered hope for the country's sputtering post-pandemic recovery.
Both OPEC and the International Energy Agency are depending on the world's biggest oil importer, China, to shore up oil demand over the rest of 2023, but the sluggish recovery of the country's economy has investors concerned.
(Ambar Warrick contributed to this item.)