Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Oil up on hints of a looming OPEC+ cut; U.S. inventory data awaited

Commodities Nov 23, 2022 03:52
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
-0.75%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-0.56%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan

Investing.com -- Oil prices rose about 1% Tuesday for their biggest leap in two weeks, as traders responded to hints that producer alliance OPEC+ could announce another production cut at its December meeting to deepen the 2-million-barrel reduction put in place this month.

Expectations that U.S. crude inventories would have fallen last week for a second week in a row also boosted sentiment in oil. 

Even so, London-traded Brent crude traded well below this month’s peak of almost $100 a barrel, while New York’s West Texas Intermediate was sharply off November’s $93 high as the Covid rampage in China continued to dominate headlines, raising concerns that capital Beijing might be headed for a full lockdown next.

WTI for delivery in January settled up 91 cents, or 1.1%, at $80.95 per barrel. The U.S. crude benchmark hit a 10-month low beneath $76 on Monday.

Brent was up 94 cents, or 1.1%, at $88.39 by 14:35 ET (19:35 GMT). The global crude benchmark slumped to a nine-month low of under $83 in the previous session.

Crude prices appeared to have bottomed as of Monday after Saudi Energy Minister Abdulaziz bin Salman, who’s in charge of OPEC+, denied a Wall Street Journal report that the 23-nation oil producing coalition was planning a production hike instead to be announced on Dec. 4.

Abdulaziz also said something else that made a bigger impact on oil bulls: “If there is a need to take further measures by reducing production to balance supply and demand, we always remain ready to intervene.” 

In OPEC+ speak, it was the clearest sign that another production cut might be coming in November as the alliance intends to restore its pricing power in a market that had lost a stunning 20% of its value over the past two weeks.

Brent went from a low of around $82 a barrel to almost $100 within days of OPEC+’s announcement of the November cut of 2M barrels per day. On Monday though, Brent sank to $82.36 a barrel, its weakest since February, before Abdulaziz’s remarks virtually brought it back into positive territory with a settlement of $87.45.

WTI climbed from around $76 a barrel to about $96 after the November production cut announced by OPEC+. On Monday, the US crude benchmark hit $75.30, its lowest since January, before rebounding on Abdulaziz’s remarks to settle modestly lower on the day, at $80.04.

“The recent oil price slide was overdone and given global economic activity excluding China won’t completely fall off a cliff, prices should continue to stabilize here,” said Ed Moya, analyst at online trading platform OANDA. 

But granted, oil bulls and bears were in “a tug-of-war, with China Covid demand concerns getting countered with what appears to be a motivated Saudi Arabia to keep the oil market tight”, Moya added.

Covid control restrictions now weigh on a fifth of China’s economy as infections continue their upward march, defying the central government’s call for more targeted, less disruptive Covid Zero measures, Bloomberg reported Tuesday. It cited 27,307 new cases for Monday alone, just shy of the previous record 28,973 reached in April when Shanghai’s outbreak sparked a surge in infections.

“For China, moving away from ‘zero-Covid’ is easier said than done,” NBC said in another report. Beijing is facing its most severe Covid test yet after the Chinese capital saw the country's first coronavirus deaths in six months, with infections continuing to soar, according to other reports. A full Beijing lockdown could have a disastrous impact on the Chinese economy, experts warn.

Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.

The API will release at approximately 16:30 ET (21:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended November 18. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.

For last week, analysts tracked by Investing.com expect the EIA to report a crude stockpile drop of 1.06-M barrels, versus the 5.4-M barrel reduction reported during the week to November 11.

On the gasoline inventory front, the consensus is for a smaller build of 383,000 barrels over the 2.2M-barrel rise in the previous week.

With distillate stockpiles, the expectation is for a drop of 550,000 barrels versus the prior week’s gain of 1.12M.

Oil up on hints of a looming OPEC+ cut; U.S. inventory data awaited
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email