Oil prices slip slightly before Opec+ talks on supply cuts
Traders say a stronger dollar was the main reason for the slightly easier prices
05 October 2022 - 08:02
byIsabel Kua and Sonali Paul
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Investment holding company HCI holds a 10% stake in an oil rich block off the coast of Namibia Picture: REUTERS
Singapore — Oil prices moderated very slightly on Wednesday after gaining more than 3% in the previous session ahead of a meeting of Opec+ producers to discuss a big cut in crude output.
Traders said a stronger dollar was the main reason for the slightly easier prices, as it reduced demand from buyers using other currencies.
Brent crude fell 22c, or 0.2%, to $91.58 a barrel at 4.27am GMT, after climbing $2.94 in the previous session.
US West Texas Intermediate (WTI) crude futures fell 29c, or 0.3%, to $86.23 a barrel after gaining $2.89 in the previous session.
Opec+ will be meeting in Vienna later on Wednesday, to discuss output cuts of up to 2-million barrels per day (bpd), an OPEC source told Reuters.
A cut of that magnitude would be the biggest made by Opec+ since demand was hit by Covid-19 in 2020.
“I will not be surprised if “buy the rumour, sell the fact” could happen since the strong rally in the crude prices may have priced in such a production cut,” Tina Teng, an analyst at CMC Markets, said.
The US is pushing Opec+ producers to avoid making deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in US petrol prices.
The real effect on supply from a lower output target would be limited as several Opec+ countries are already pumping well below their existing quotas. In August, Opec+ missed its production target by 3.58-million bpd.
However an agreement on big cuts “would send a strong message that the group is determined to support the market,” ANZ Research analysts said in a note, adding that it “would significantly tighten the market.”
US crude oil stocks fell by about 1.8-million barrels for the week ended September 30, according to market sources citing American Petroleum Institute figures on Tuesday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices slip slightly before Opec+ talks on supply cuts
Traders say a stronger dollar was the main reason for the slightly easier prices
Singapore — Oil prices moderated very slightly on Wednesday after gaining more than 3% in the previous session ahead of a meeting of Opec+ producers to discuss a big cut in crude output.
Traders said a stronger dollar was the main reason for the slightly easier prices, as it reduced demand from buyers using other currencies.
Brent crude fell 22c, or 0.2%, to $91.58 a barrel at 4.27am GMT, after climbing $2.94 in the previous session.
US West Texas Intermediate (WTI) crude futures fell 29c, or 0.3%, to $86.23 a barrel after gaining $2.89 in the previous session.
Opec+ will be meeting in Vienna later on Wednesday, to discuss output cuts of up to 2-million barrels per day (bpd), an OPEC source told Reuters.
A cut of that magnitude would be the biggest made by Opec+ since demand was hit by Covid-19 in 2020.
“I will not be surprised if “buy the rumour, sell the fact” could happen since the strong rally in the crude prices may have priced in such a production cut,” Tina Teng, an analyst at CMC Markets, said.
The US is pushing Opec+ producers to avoid making deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in US petrol prices.
The real effect on supply from a lower output target would be limited as several Opec+ countries are already pumping well below their existing quotas. In August, Opec+ missed its production target by 3.58-million bpd.
However an agreement on big cuts “would send a strong message that the group is determined to support the market,” ANZ Research analysts said in a note, adding that it “would significantly tighten the market.”
US crude oil stocks fell by about 1.8-million barrels for the week ended September 30, according to market sources citing American Petroleum Institute figures on Tuesday.
Reuters
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