HOUSTON, Oct 3 (Reuters) – Oil prices jumped $3 a barrel on Monday as OPEC+ considered cutting production by more than a million barrels per day (bpd) to support prices with this which would be its biggest drop since the start of the COVID-19 pandemic.
Brent crude futures for December delivery rose $2.99 to $88.13 a barrel, a gain of 3.5%, at 12:50 p.m. ET (4:50 p.m. GMT). U.S. West Texas Intermediate crude rose $3.33, or 4.2%, to $82.82 a barrel.
Oil prices have fallen for four consecutive months since June as COVID-19 lockdowns in China, the biggest energy consumer, hurt demand, while rising interest rates and rising US dollar weighed on global financial markets.
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The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, are considering a production cut of more than a million bpd ahead of Wednesday’s meeting, officials told Reuters. OPEC+ sources.
That figure does not include additional voluntary cuts by individual members, an OPEC source added.
Most traders expected cuts of around 50,000 bpd, said Dennis Kissler, senior vice president of trading at BOK Financial.
If agreed, it will be the group’s second consecutive monthly cut after cutting production by 100,000 bpd last month.
“After a year of tolerating extremely high prices, missed targets and very tight markets, the alliance (OPEC+) does not seem to hesitate to act quickly to support prices amid a deteriorating economic outlook,” he said. said Craig Erlam, market analyst at Oanda. .
OPEC+ missed its production targets by nearly 3 million bpd in July, two sources from the producer group said, as sanctions imposed on some members and weak investment by others hampered its ability to increase production .
While fast Brent prices could strengthen in the near term, concerns over a global recession are likely to limit the upside, said consultancy FGE.
“If OPEC+ decides to cut production in the near term, the resulting increase in OPEC+ spare capacity will likely put more downward pressure on prices in the long term,” he said. said Friday in a note.
The dollar index fell for the fourth straight day on Monday after hitting its highest level in two decades. A cheaper dollar could boost demand for oil and support prices.
Goldman Sachs said it believes the OPEC+ supply cut could help address the massive exodus of oil investors that has left prices underperforming.
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Reporting by Noah Browning Additional reporting by Florence Tan and Muyu Xu Editing by David Goodman, Paul Simao and David Gregorio
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