Oil jumps more than 3% ahead of OPEC+ meeting on supply cuts

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NEW YORK – Oil rose nearly $3 a barrel on Tuesday on expectations of a sharp cut in crude output from the OPEC+ producer group and a weak U.S. dollar that made oil buying less Dear.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are expected to cut production at their meeting on Wednesday. The move would squeeze supply in an oil market that energy company executives and analysts say is already stretched due to healthy demand, lack of investment and supply issues.

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Brent crude settled at $91.80 a barrel, up $2.94 or 3.3%. U.S. West Texas Intermediate (WTI) crude closed at $2.89, or 3.5%, up at $86.52 a barrel.

Group sources said OPEC+, which includes Russia, is discussing production cuts of more than 1 million barrels per day (bpd). Oil extended its gains after Bloomberg reported that OPEC+ was considering a 2 million bpd cut.

“We expect a substantial reduction to occur, which will not only help tighten physical fundamentals, but send an important signal to the market,” Fitch Solutions said in a note.

Kuwait’s Petroleum Minister said OPEC+ will make an appropriate decision to secure energy supply and serve the interests of producers and consumers.


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OPEC+ boosted output this year after record cuts implemented in 2020 when the pandemic reduced demand.

In recent months, the group has failed to meet its planned production increases, missing in August by 3.6 million bpd.

The planned production target cut is justified by the sharp drop in oil prices from recent highs, Goldman Sachs said, adding that this bolsters its bullish outlook for oil.

Also pushing up oil prices, the US dollar was heading for a fifth daily loss against a basket of currencies as investors speculated that the US Federal Reserve could slow its interest rate hikes.

“There is no doubt that there is underlying support from a weak dollar and the potential for a Fed pivot,” Bob Yawger, director of energy futures at Mizuho told New York. York.

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The Fed’s potential easing of its rate hikes would allay some fears of a US economic recession that could dampen demand for crude.

Meanwhile, a senior US Treasury official said the G7 sanctions against Russia would be implemented in three phases, first targeting Russian oil, then diesel, then lower-value products such as naphtha. .

Sanctions from the G7 and the European Union, which opts for a two-phase ban, are set to begin on December 5.

Swiss lender UBS said it sees several factors that could drive crude prices higher towards the end of the year, including « recovery in Chinese demand, further supply cut from OPEC+, end of publication of the US Strategic Petroleum Reserve (SPR) and the upcoming EU ban on Russian crude.” exports. »

Major oil traders also told the Argus European Crude Conference in Geneva on Tuesday that economic headwinds had yet to cause a significant erosion in global oil demand.

US crude oil and fuel inventories fell about 1.8 million barrels for the week ended September 30, according to market sources citing figures from the American Petroleum Institute.

Gasoline stocks fell about 3.5 million barrels, while distillate stocks fell about 4 million barrels, according to the sources, who spoke on condition of anonymity. Official inventory data is expected on Wednesday. (Additional reporting by Bozorgmehr Sharafedin in London and Isabel Kua in Singapore; Editing by Marguerita Choy, David Gregorio and Jonathan Oatis)



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