Oil rebounds 3% as OPEC + assesses the biggest production cut since 2020

Oil rebounds 3% as OPEC + assesses the biggest production cut since 2020

  • OPEC+ considers cut of more than 1 million bpd: sources
  • China emits largest share of oil products this year

SINGAPORE, Oct 3 (Reuters) – Oil prices rose more than 3% in early Asian trading on Monday as OPEC+ considers cutting output by more than 1 million barrels a day for its biggest reduction since the pandemic. , in an attempt to support the market. .

Brent crude futures rebounded $2.51, or 3%, to $87.65 a barrel by 0206 GMT, after being down 0.6% on Friday. US West Texas Intermediate crude also rose 3%, or $2.39, to $81.88 a barrel, after losing 2.1% in the previous session.

Oil prices have fallen for four straight months since June as COVID-19 lockdowns in top energy consumer China hit demand, while rising interest rates and a surging US dollar weighed. in world financial markets.

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To support prices, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, is considering a production cut of more than 1 million bpd before Wednesday’s meeting, OPEC+ sources told Reuters. read more

If agreed, this will be the group’s second consecutive monthly cut after cutting output by 100,000 bpd last month.

However, OPEC+ fell short of its production targets by nearly 3 million bpd in July, two sources at the producer group said, as sanctions on some members and underinvestment by others hampered its ability to ramp up output. read more

“Anything below 500,000 barrels per day would be ignored by the market. Therefore, we see a significant chance of a cut of up to 1 million barrels per day,” the ANZ analysts said in a note.

While fast Brent prices could strengthen further in the immediate short term, concerns about a global recession are likely to cap the upside, consultancy FGE said.

“If OPEC+ decides to cut production in the short term, the resulting increase in additional OPEC+ capacity will likely put further downward pressure on prices in the long term,” it said in a note on Friday.

Also on Friday, China issued its largest export quota for petroleum products this year and completed crude import quotas for independent refiners. read more read more

State and private refiners can export up to 15 million tons of low-sulfur gasoline, diesel, jet fuel and fuel oil, adding much-needed supplies to global markets to replace Russian exports that the European Union embargoed in February.

However, analysts and traders said some of China’s exports are likely to stretch into early 2023 as refiners will need time to ramp up.

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Information from Florence Tan; Edited by Clarence Fernandez

Our standards: the Thomson Reuters Trust Principles.

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