WTI recaptures the $81.50 area as Saudi Arabia and Russia tightened supply

• WTI recovers its recent losses and reclaimed the $81.50 mark on Friday.
• Saudi Arabia will extend its voluntary oil output cut of one million barrels per day (bpd) through September.
• The US Initial Jobless Claims rose to 227K last week; the ISM Service PMI (Jul) dropped to 52.7 from 53.9 prior.
• Investors will closely watch the US Nonfarm Payrolls due on Friday. 

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $81.58 mark so far on Friday. WTI bounces off a weekly low of $74.45 on Thursday as Saudi Arabia and Russia to extend a voluntary oil output cut.

WTI gains momentum following Saudi Arabia’s voluntary production cut extension announcement. That said, Saudi Arabia will extend its voluntary oil output cut of one million barrels per day (bpd) through September. In September, Saudi production is anticipated to be around 9 million bpd. In the meantime, Russia's oil exports will decrease by 300,000 bps in September, according to Deputy Prime Minister Alexander Novak.

Talking about the data, the US Energy Information Administration (EIA) reported that crude oil inventories fell by 17 million barrels, the steepest decline since records began in 1982. Increased refinery runs and robust crude exports triggered the drop. Meanwhile, the American Petroleum Institute indicated on Tuesday that US crude oil stockpiles decreased by around 15.4 million barrels in the week ending July 28 after rising by 1,319 million barrels the previous week. The analysts forecast a decline of 1.37 million barrels.

Furthermore, the US Department of Labor reported on Thursday that Initial Jobless Claims increased to 227,000 for the week ended July 29, matching expectations. At the same time, the ISM Service PMI for July dropped to 52.7 from 53.9 prior and was worse than expected at 53. Market participants will take more cues from the US wage inflation and the US employment data due on Friday. These data could provide hints about the Federal Reserve's (Fed) monetary policy guidance for the entire year. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand. 

On the other hand, China’s Caixin Services PMI climbed to 54.1 in July from 53.9 prior, better than the market consensus of 52.5. The upbeat Chinese economic figure could benefit WTI prices as China is the world's second-largest oil consumer. Additionally, the Chinese authorities committed to providing additional financial resources to the private sector to boost confidence as the economy lags. This, in turn, might cap the downside in WTI prices.

Looking ahead, the US Nonfarm Payrolls will be closely watched this week. The US economy is expected to have created 180,000 jobs in July. Market participants will monitor the figures and find trading opportunities around the WTI price.