- Crude oil prices rose early Friday morning amid growing hopes of OPEC+ production cuts.
- OPEC is already producing less than expected, but the group has complained of a tight market and hinted at production cuts.
- On Thursday, Russia announced it would stop selling oil to countries that are enforcing oil price caps, adding to upward pressure on the oil market.
Traders’ hopes that OPEC and its partners will approve production cuts at next week’s meeting put upward pressure on oil prices early Friday morning, allowing benchmarks to recoup some of the losses incurred earlier in the week. did.
Both Brent and WTI were up nearly 2% at the time of writing, with Brent crude trading at $94.10 a barrel and WTI at $88.19 a barrel.
The idea of cut production by OPEC+ producers was floated last month by Saudi Energy Minister Abdulaziz bin Salman, who said oil paper markets would be cut off from the real market, with prices too low relative to real supply conditions. said to suggest that
“They are trying to pump up the market as much as possible to better reflect a tight market exposed to problems on the supply side,” ANZ commodity analyst Daniel Hines told Reuters. Let’s go,” he said. He added that a deal on cuts is by no means certain.
OPEC, following its own production agreements with OPEC+ partners, is producing less than expected for a variety of reasons, from political instability to technological limitations.
OPEC Plus said in a report by the group’s joint technical committee this week that the oil market will remain in the black at a level of 900,000 bpd this year. Demand lags supply by 400,000 barrels a day, but the balance could turn from surplus to deficit next year, the report said.
“Given very low global inventory levels, limited alternative supply capacity and continued energy shortages in Europe, OPEC+ is expected to continue to grow,” Baden Moore, head of the National Bank of Australia, told Reuters. “We expect a drop in supply to have a significant impact on oil prices.”
OEPC+ will meet next Monday to discuss production policy. Yesterday, Russia put upward pressure on prices by announcing that it would stop selling oil to countries capping oil prices if the G7 approves the cap.
By Irina Slav for Oilprice.com
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