Oil prices post back-to-back gains as OPEC+ ministers defend new deal (NYSEARCA:USO)

Crude oil futures rose for a second straight session Thursday, adding to their rebound from the selloff early this week that followed OPEC’s decision to start tapering production cuts after September.

The European Central Bank announced its first interest rate cut since 2019, citing progress in fighting inflation, a day after Canada made the same move, boosting hopes that the U.S. Federal Reserve will eventually follow suit.

The ECB rate cuts are “casting a view that the Fed will finally follow suit here in the U.S. as well which is supportive, but both central banks are cutting in the face of a slowing economy which is not necessarily supportive of oil demand,” Again Capital’s John Kilduff told Reuters.

Friday’s U.S. payrolls data will be closely watched as markets look for signs that could lead the Fed to start easing.

Front-month Nymex crude (CL1:COM) for July delivery settled +2% to $75.55/bbl, and front-month August Brent crude (CO1:COM) closed +1.8% to $79.87/bbl.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)

Meanwhile, OPEC+ ministers sought to reassure investors that they could tweak their production plan if needed to provide support for the market.

Speaking at Russia’s Economic Forum in St Petersburg, which he attended along with several other top OPEC+ ministers and officials, Saudi Energy Minister Prince Abdulaziz bin Salman reiterated that Sunday’s agreement – like many of the group’s previous deals – retains the option to pause or reverse output changes if necessary.

Prince Abdulaziz also criticized analysts at Goldman Sachs and elsewhere for their interpretation of the OPEC+ accord and predicted the market would come round to the view that OPEC+ did “the right thing.”

“We are ready to react quickly to market uncertainties,” Russian Deputy Prime Minister Alexander Novak chipped in.

“Oil markets have overreacted to the mildly negative OPEC+ meeting outcome. Demand indicators have certainly softened somewhat recently, but are not falling off a cliff,” Barclays analyst Amarpreet Singh wrote, according told Reuters.

But in a potentially bearish sign for the market, Saudi Aramco cut the July price for its flagship Arab Light crude to Asian customers after three consecutive monthly increases, and reduced prices for other lighter and heavier crude grades to Asia.