Oil Prices Rally on Anticipation of OPEC+ Further Supply Cuts
Since late September, oil prices have witnessed a nearly 20% decline, with Brent and WTI prompt inter-month spreads slipping into contango last week. In a contango market, prompt prices are lower than those in future months, indicating ample supply.
Karobar
LONDON: Crude oil futures experienced a modest uptick on Monday, building on recent gains amid expectations of OPEC+ considering additional supply cuts. The move is aimed at stabilizing prices, which have faced a four-week decline due to concerns over demand and disruptions in Middle East supply attributed to the Israel-Hamas conflict.
Brent crude futures saw a 34-cent rise, reaching $80.95 a barrel by 0915 GMT, while US West Texas Intermediate crude rose by 31 cents to $76.20.
The front-month December WTI contract is set to expire later today, with the more active January futures increasing by 38 cents to $76.42.
Friday saw both contracts closing 4% higher following reports from three OPEC+ sources, revealing that the producer group, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, will contemplate additional supply cuts during their meeting on Nov. 26.
Tamas Varga of oil broker PVM commented:
“In light of last week’s obliteration of oil bulls, some kind of response was forthcoming from the (OPEC) producer group. If additional cuts are agreed, a short-term price boost is expected, but its longer-term price impact seems dubious as enforcement and adherence will be the salient issue.”
Investors are closely monitoring Russian crude oil trade, particularly after Washington imposed sanctions on three ships that transported Sokol crude to India. Moscow's decision to lift the ban on gasoline exports and ease restrictions on diesel exports last month may contribute to global fuel supplies.
US energy companies, in a notable shift, added oil and gas rigs for the first time in three weeks, as reported by energy services business Baker Hughes on Friday. The oil and gas rig count serves as an early indicator of future output.
In the Middle East, despite ongoing fierce fighting, US and Israeli officials indicated that a deal to release some hostages held in the besieged Gaza enclave was nearing.
