Oil prices soar ahead of OPEC+ meeting to discuss austerity measures

SINGAPORE, Oct. 4 (Reuters) – Oil prices rose Tuesday as expectations that OPEC+ could agree to a major cut in crude production on Wednesday outweighed concerns about the global economy.

Brent crude futures were up 47 cents, or 0.5%, to $89.33 a barrel at 0352 GMT, after gaining more than 4% in the previous session.

US crude oil futures rose 31 cents or 0.4% to $83.94 a barrel. The benchmark gained more than 5% in the previous session, the largest daily gain since May.

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Oil prices rose Monday on renewed concerns about supply shortages. Investors expect the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, to cut production by more than 1 million barrels per day (bpd) on Wednesday at their first in-person meeting since 2020.

Voluntary cuts by individual members could come on top of this, making it their biggest cut since the start of the COVID-19 pandemic, OPEC sources said. read more

“Despite all that is going on with the war in Ukraine, OPEC+ has never been stronger and they will do everything they can to ensure that prices are supported here,” said Edward Moya, senior analyst at OANDA, in a statement. note.

OPEC+ has ramped up production this year after record cuts made in 2020 due to the destruction of demand caused by the COVID-19 pandemic. But in recent months, the organization has failed to deliver on its planned production increases, with a deficit of 3.6 million barrels per day in August.

“While OPEC+ could announce a large cut (more than 1 million barrels per day), in reality the cut could be much smaller. This is because most OPEC+ members are producing well below their target production levels,” ING analysts said in a statement. a note.

The contemplated production cut was justified by the sharp drop in oil prices from recent highs, Goldman Sachs said, adding that it bolstered its optimistic view on oil. read more

Concerns about the global economy could cap the upside, said Tina Teng, an analyst at CMC Markets, as investors also look to profit from gains made in the previous session.

“There remain uncertainties in global markets, such as bond market turmoil, the sell-off of risky assets and a skyrocketing US dollar,” Teng said.

Oil prices have fallen for four straight months as COVID-19 lockdowns in major oil importer China dampened demand, while rate hikes and a rising US dollar put pressure on global financial markets. Major central banks have embarked on the most aggressive round of rate hikes in decades, fueling fears of a global economic slowdown.

U.S. crude oil inventories are estimated to have risen by about 2 million barrels in the week to Sept. 30, a preliminary Reuters poll showed on Monday.

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Reporting by Isabel Kua; Editing by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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