Black Friday Sale! Save huge on InvestingProGet up to 60% off

Oil Creeps Higher Ahead of Potential OPEC+ Supply Cut

Published 05/09/2022, 10:16 am
© Reuters.
LCO
-
CL
-

By Ambar Warrick

Investing.com-- Oil prices rose on Monday, recovering some ground after bruising losses last week as investors awaited details on potential OPEC production cuts from a meeting later in the day.

London-traded Brent oil futures rose 1.4% to $94.59 a barrel, while U.S. West Texas Intermediate futures rose 1.6% to $88.30 a barrel by 20:08 ET (00:08 ET).

Crude prices slumped between $6 and $8 over the past week as growing concerns over a global economic recession severely crimped the outlook for crude demand. Traders are fearing an extended economic slowdown in the United States as the Federal Reserve embarks on a monetary tightening cycle.

Reports that the U.S. and Iran are nearing a revival of the nuclear deal also dented crude prices with the prospect of a supply glut. Washington on Friday signaled that it was keen on striking a deal with Tehran, given that the U.S. is struggling with elevated inflation due to high fuel prices.

Focus now turns to the Organization of Petroleum Exporting Countries and its allies (OPEC+), which will convene later in the day to decide on whether to cut supply. The cartel had earlier signaled that it would reduce production to support prices, even with several of its members producing below daily quotas.

But reports suggest that the cartel will likely keep production unchanged or implement a small supply cut. Despite concerns over slowing crude demand, supply conditions appear to be tight, particularly with Russia planning to scale back crude exports.

Moscow also shut off gas supplies to Europe, a move that could exacerbate a brewing energy crisis in the euro zone and support demand for oil.

Last week, a bigger-than-expected draw in U.S. crude inventories suggested that gasoline demand in the world’s largest economy was improving after a lull through the bulk of the year.

But concerns over an economic slowdown in China, the world’s largest crude importer, weighed on the outlook for crude demand. COVID-19 lockdowns and a recent energy shortage ground Chinese economic activity to a halt this year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.