NEW YORK: Oil prices stabilized in choppy trade on Thursday, rising above $90 a barrel, then falling as traders weighed a worsening economic outlook from potential OPEC+ production cuts in the week next.
Brent crude futures settled 83 cents at $88.49 a barrel, after hitting $90.12 during the session. U.S. crude futures for November fell 92 cents to $81.23 a barrel.
Leading members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have begun talks about cutting oil production at their next meeting on Oct. 5, three sources told Reuters. Reuters.
OPEC+, which includes OPEC nations and allies such as Russia, agreed to a small oil production cut of 100,000 barrels a day at its September meeting to support prices.
Saudi Arabia, OPEC’s top producer, signaled in August the possibility of production cuts to deal with market volatility.
Also at the group’s latest meeting, OPEC+ members agreed to stick to their predictions of robust global oil demand growth in 2022 and 2023, citing signs that major economies are holding off. came out better than expected despite headwinds such as soaring inflation.
Oil demand will increase by 3.1 million barrels per day in 2022 and 2.7 million bpd in 2023, unchanged from last month, OPEC said in its monthly report.
An OPEC source told Reuters a cut was “likely”, while two other OPEC+ sources said key members had spoken on the subject.
Reuters reported this week that Russia is likely to offer OPEC+ to cut oil production by around 1 million barrels per day (bpd).
“Right now, the oil market is swinging between Fed-induced demand destruction and oil supply,” said Ryan Dusek, director of the Commodity Risk Advisory Group at Opportune LLP.
U.S. stock markets fell on fears the Federal Reserve’s aggressive fight against inflation could hamper the U.S. economy, and as investors worried about a rout in global currency and debt markets.
“Amid so much uncertainty, seesaw trading could be commonplace over the next week unless we get more clarity from OPEC+ sources on the likely magnitude of any adjustment and what this means for previous missed quotas,” said Craig Erlam, senior market analyst at OANDA. .
The market also eased as the threat from Hurricane Ian receded and U.S. oil production was expected to return in the coming days after the Gulf of Mexico closed around 158,000 bpd on Wednesday, data showed. federal.
In China, the world’s biggest crude oil importer, travel during the upcoming national holiday week is set to hit its lowest level in years as Beijing’s zero-COVID rules keep people at home while economic hardship curbs expenses.
Crude benchmarks remain on pace to post weekly gains after a four-week losing streak. Earlier in the week, they rebounded from nine-month lows, supported by a decline in the US dollar index and a bigger-than-expected decline in US fuel inventories.
The dollar index fell again on Thursday, dampening 20-year highs, indicating heightened risk appetite among investors.
Further support for oil prices could come from the US announcement of new sanctions against companies that facilitated sales of Iranian oil.
“I think the traders have almost given up on getting a nuclear deal and this announcement from the US seems like a breakthrough decision,” Erlam said.