Sept 27 – Following a day-long drop to nine-month lows, oil prices rose more than 1% on Tuesday, fueled by suggestions that the OPEC producer coalition may limit output to avert further price losses.
Brent oil futures for November delivery were up $1.17, or 1.39%, to $85.23 a barrel at 0644 GMT. WTI oil for November delivery in the United States was trading at $77.84 a barrel, up $1.13 from the previous day.
The dollar fell from 20-year highs set the day before, which aided the oil market.
Brent fell 7.1% and WTI fell 8.1% in the previous two trading sessions, owing to the dual pressures of a strengthening dollar, which makes crude priced in greenbacks more expensive for buyers using other currencies, and mounting fears that rising interest rates will lead to a recession, reducing fuel demand.
Analysts believe that OPEC+ may intervene to raise prices by pooling their supply if oil markets continue to fall.
According to analysts at ING Economics in a report, if there are cuts, they must be substantially more than the 100,000 barrels per day (bpd) agreed upon at the last meeting.
Following extraordinary production cuts enforced in 2020 as a result of the COVID-19 pandemic’s destruction of demand, OPEC boosted output this year. However, the effectiveness of any announced output reductions is jeopardized because the organization has recently fallen short of its planned output growth. See More
The Russia-Ukraine crisis, as well as the uncertain implementation date of the European Union’s proposed price cap on Russian oil supplies, are exacerbating the market’s anxiety.
According to Sugandha Sachdeva, vice president of commodity research at Religare Broking, we estimate WTI prices to rebound around $80 per barrel and Brent prices to recover around $87 per barrel.
According to BP Plc (BP.L) and Chevron Corp, production at offshore oil rigs in the Gulf of Mexico, the largest U.S. offshore production zone, was paused on Monday because of Hurricane Ian’s expected arrival (CVX.N).
A category 2 storm was affecting the Caribbean, and it was projected to strengthen into a major hurricane in two days.