Oil Spikes on Positive Anticipations
Oil prices rose on Friday as traders anticipated that OPEC+ would discuss output cuts at their meeting on September 5. However, gains were still constrained by worries about China’s COVID-19 restrictions and the sluggish global economy.
By 0900 GMT, West Texas Intermediate (WTI) oil futures in the United States had increased $2.62, or 3%, to $89.23. Brent crude futures had risen $2.72, or 2.9%, to $95.08 a barrel. In the previous session, both benchmarks fell 3% to two-week lows, with Brent expected to decline by around 6% over the week and WTI by approximately 4%. Amidst anticipated drops in demand, the Organization of the Petroleum Exporting Countries (OPEC and allies, collectively known as OPEC+), which includes top producer Saudi Arabia, is scheduled to meet on September 5. Saudi Arabia claims supply is still tight.
Expert’s Predictions of Energy Markets
OANDA senior market analyst Craig Erlam said that after dropping over the week to almost their summer lows, oil prices are up today. The recovery occurs when it appears that Iran and the United States’ nuclear negotiations have halted. An agreement has lately posed a significant downward risk to oil prices; Saudi Arabia tried to minimize this risk by issuing warnings of production reduction from the alliance.
This week, OPEC+ updated market balances for this year and now expects demand to outpace supply by 400,000 barrels per day (BPD), down from the prior prediction of 900,000 BPD. In its base case scenario for 2023, the producer group projects a market shortfall of 300,000 BPD. A potential price ceiling on Russian oil exports is another thing the market is watching out for. The G7 finance ministers are anticipated to finalize measures on Friday to set a price ceiling on Russian oil to reduce revenue for Moscow’s conflict in Ukraine while maintaining a steady supply of petroleum to prevent price surges.
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