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Investing.com — Oil prices received an unexpected boost Monday, after top exporters Saudi Arabia and Russia announced supply cuts for August, overshadowing concerns over slowing economic activity.

By 09:35 ET (13:35 GMT), futures traded 0.3% higher at $70.84 a barrel, while the contract rose 0.3% to $75.62 a barrel.

Top exporters reduce supplies

Saudi Arabia announced earlier Monday that it would extend its voluntary cut of one million barrels per day to also include August, while Russia also stated it will reduce its oil exports by 500,000 barrels per day in August.

The cuts amount to 1.5% of global supply and bring the total pledged by the OPEC+ oil producers to 5.16M barrels per day.

Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, has been trying to prop up prices, which are still over 11% lower so far this year on concerns of an economic slowdown.

Disappointing PMI data

More evidence of the global economic slowdown emerged earlier Monday, with data showing eurozone manufacturing activity contracted faster than initially thought in June.

The final eurozone fell to 43.4 from May’s 44.8, its lowest since the COVID pandemic was cementing its grip on the world, below a preliminary reading of 43.6 and further from the 50 mark separating growth from contraction.

The Chinese data was slightly better than expected, with the reading 50.5 for June, higher than expectations for a reading of 50.2.

However, this was still slower than the prior month’s reading of 50.9, and contrasts with last week’s official survey which showed that China’s manufacturing activity contracted for a third straight month in June.

Non-policy OPEC meeting this week

The move by the Saudi and Russian governments to cut supplies has taken the shine off a meeting of oil industry executives with energy ministers from the Organization of Petroleum Exporting Countries and allies later this week.

While the forum is not a policy meeting, meaning that any changes to OPEC production are unlikely, it is still expected to offer cues to the oil market, amid growing fears of worsening demand this year.

Net long positions reduced

This uncertainty surrounding the likely slowing in demand growth as well as supply levels has been reflected in the latest positioning data, which shows that speculators reduced their net long positions in both the ICE Brent and NYMEX WTI contracts over the last reporting week. 

“This was driven by a combination of longs liquidating and fresh shorts entering the market,” said analysts at ING, in a note, with the numbers resulting in “the smallest net long speculators have held in WTI since March when we saw prices trading briefly below US$65/bbl.”