Oil prices reached a new high for the year as Saudi Arabia and Russia, the world’s top crude exporters, announced an extension of their oil output cuts for at least another three months. Brent crude, the global benchmark, rose by 1.8% to surpass $90 a barrel, while West Texas Intermediate (WTI), the US benchmark, also increased to $87 a barrel. <\/p>\n\n\n\n
This move reinforces efforts to support oil prices through significant and prolonged production cuts. Saudi Arabia said that it will continue its production cut of 1 million barrels per day until the end of December, with the option to review and potentially deepen the cut. Russia also decided to reduce its exports by 300,000 barrels per day through the end of 2023. Saudi Arabia needs oil prices to be around $81 a barrel to balance its budget, while Russia is seeking higher revenues to support its efforts in Ukraine.<\/p>\n\n\n\n
Our View: <\/strong>Brent crude broke a significant resistance point at $87.90 per barrel, indicating a potential upward trajectory. Price actions suggest that it is likely to reach a Fibonacci level at $93.34, which coincides with the fifth wave target for this commodity. <\/p>\n\n\n\n Furthermore, supply-side apprehensions are set to intensify due to global demand dynamics. Notably, U.S. oil inventories have been on a declining trend, while recent forecasts for Chinese demand have been revised upwards, adding to the bullish sentiment for oil. As such, the decision to extend production cuts carries significant consequences for the global energy landscape.<\/p>\n\n\n\n The Philippines, as a net oil importer, is particularly susceptible to these developments, given its heavy reliance on imported oil to fulfill its energy requirements. This dependence is further exacerbated by the weakness of the Philippine Peso, potentially setting off a detrimental vicious cycle. Notably, fuel prices in the Philippines have been on a relentless upward trajectory, extending for eight consecutive weeks and showing no signs of abating. <\/p>\n\n\n\n The nation is already grappling with the challenges posed by escalating food prices, and the continued uptick in fuel costs is poised to exacerbate the strain on the purchasing power of the Filipino consumers.<\/p>\n\n\n\n