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Following OPEC+'s announcement that it would reduce output by 1.16 million barrels per day, oil prices surged by as much as 8% at the open. Brent crude futures rose by 5.07% to $83.95 a barrel, while U.S. West Texas Intermediate crude futures climbed 5.17% to $79.59 a barrel.
Saudi Arabia, which called the move a "precautionary measure" aimed at stabilizing the oil market, stated that the voluntary cuts would take effect from May 2023 until the end of that year.
Russia's Deputy Prime Minister Alexander Novak confirmed that his country would cut oil production by 500,000 barrels per day until the end of 2023, while other OPEC+ member states, including Saudi Arabia and the UAE, have pledged respective cuts. Kuwait, Oman, Iraq, Algeria, and Kazakhstan are also among the countries implementing cutbacks.
According to economists, the increase in oil prices might result in elevated levels of inflation, which again could result in interest rate hikes this year. Last month, oil prices traded at the lowest levels since December 2021 as investors were worried about the baking crisis in the U.S.. resulting in tepid economic growth globally.
Tesla stock is up in pre-market trading
Tesla (NASDAQ: TSLA) has released its Q1 2023 vehicle production and delivery report. The report shows that the electric vehicle maker delivered a total of 422,875 vehicles and produced 440,808 vehicles in Q1 2023.
Deliveries, which represent the closest approximation to sales and are not broken down by region or individual model, increased by 36% compared to the same period last year and by 4% sequentially, when the company delivered 405,278 vehicles.
Of the total deliveries, 10,695 were higher-priced Model S and X vehicles, while 412,180 were lower-priced Model 3 sedans and Model Y crossovers. The company did not report production and delivery figures for its heavy-duty Semi trucks. For the period ending March 31, 2023, Tesla produced 19,437 Model S and X vehicles and 421,371 Model 3 and Y vehicles.
Shares of Tesla are trading higher in pre-market trading today.
What next for S&P 500 investors this week?
In the U.S., the upcoming trading week with markets closed on Friday. The labor market will be a key focus, with the release of the February Job Openings and Labor Turnover Survey (JOLTS) report scheduled for Tuesday, followed by ADP's National Employment Report on Wednesday, which tracks private sector payrolls.
It's anticipated that job openings will have slightly decreased to 10.8 million, down from 10.824 million in January. Despite the tight labor market, job openings are still well above pre-pandemic levels, with nearly two openings for every unemployed person.
It's expected that private businesses added 200,000 positions in March, down from the previous month's gain of 242,000.
These reports will pave the way for the release of the latest nonfarm payrolls report on Friday, which tracks job growth in March. Additionally, the latest Purchasing Managers' Index (PMI) readings from S&P Global and the Institute for Supply Management (ISM) will provide insights into the strength of the manufacturing and service sectors in the U.S.
Economists are projecting that U.S. employers added 240,000 jobs in March, compared to the previous month's gain of 311,000. The unemployment rate is expected to remain unchanged at 3.6%, which is close to a 50-year low.
The U.S. economy has added a total of 815,000 jobs in the first two months of 2023, averaging 407,500 jobs per month. This figure is slightly higher than the average monthly gain of 400,000 in 2022, suggesting that the labor market remains robust despite the Federal Reserve's efforts to manage inflation and the economy by increasing interest rates.
On Monday, officials from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, will hold a virtual meeting to discuss the possibility of further supply cuts. OPEC+ had previously reduced output by two million barrels per day in November 2022 to support declining prices.