U.S. Crude Turns Positive, Brent Pares Losses On OPEC+ Cut Rumors
2 mins read
Published on December 31, 2022
Global oil benchmarks pulled back from their lowest levels in nearly a year on Monday, with U.S. crude ending positive, bolstered by talk of an OPEC+ production cut that offset concerns about strict COVID-19 curbs in China, the world's biggest crude importer.
Price action was volatile. U.S. West Texas Intermediate (WTI) crude settled up 96 cents, or 1.3%, at $77.24, after earlier touching its lowest since December 2021 at $73.60.
Brent crude also briefly turned positive, but settled down 44 cents, or 0.5%, at trade at $83.19 a barrel, having slumped more than 3% to $80.61 earlier in the session for its lowest since Jan. 4, 2022.
Both benchmarks have posted three consecutive weekly declines.
"The word on the street is there's rumor that OPEC+ is already starting to float the idea of a production cut on Sunday," said Matt Smith, lead oil analyst at Kpler. "That's helped reverse losses that were caused overnight by Chinese protests."
Analysts at Eurasia Group suggested in a note Monday that weakened demand out of China could spur the Organization of the Petroleum Exporting Countries and allies including Russia to cut output after reducing supply in October.
"The decision will depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of the EU sanctions," the group wrote in its note.
OPEC+ will meet on Dec. 4. In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.
The rumors of a possible cut outweighed an earlier sell-off built on the weak outlook out of China, where hundreds of demonstrators and police clashed on Sunday over strict COVID restrictions that have limited free moment among millions of residents.
China has stuck with President Xi Jinping's zero-COVID policy even as much of the world has lifted most restrictions.
Speculative buyers also helped reverse early losses, said Robert Yawger, director of energy futures at Mizuho in New York.
"Pretty much every time we have a multiple percentage point move lower, you'll see the specs come in in the afternoon and buy the dip," he said.
Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow's military offensive in Ukraine without disrupting global oil markets, and will meet again on Monday.
However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.
The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude also takes effect.
Great Deals on Used CarsView All Used Cars
- 8,000 km
- 53,763 km
- 88,000 km
- 24,110 km
- 72,000 km
- 20,156 km
- 64,000 km
- 65,000 km
- 85,000 km
- 70,123 km
-18581 second ago
American-owned Trackhouse, led by Justin Marks and musician Pitbull, to replace RNF on the starting grid for 2024.
-17040 second ago
Porsche AG’s Leipzig plant rolled out its two millionth vehicle recently, a new-gen Panamera Turbo E-Hybrid, which is now heading to its owner in Dubai
-14603 second ago
The Toyota Supra GT4 100th Edition Tribute will be limited to just 100 units and get a new GR Supra GT4 Evo racecar-inspired livery along with Gazoo Racing accessories
11 hours ago
The new video shows the subcompact SUV’s redesigned tail section and confirms that it will get ADAS functions
12 hours ago
The Mercedes-AMG CLE 53 4MATIC+ Coupe has an upgraded 3.0-litre inline six-cylinder turbo engine producing 442 bhp and 560 Nm torque.
14 hours ago
The Swift will be powered by a 1.2 litre, 3-cylinder petrol engine that puts out 81 bhp and 108 Nm of torque
14 hours ago
The Revuelto is powered by a 6.5 litre V12 engine mated to three electric motors that churn out a combined 1001 bhp
15 hours ago
Kia India takes the wraps off its new EV charging initiative, the K-Charge. It will be available to non-Kia EV owners as well.
15 hours ago
Milestone was reached about 7 years after the plant commenced operations in February 2017.
16 hours ago
Hero MotoCorp and Ather Energy come together to form a partnership for an inter-operable fast-charging network in India.
On Monday, both benchmarks ended about 1% higher after falling to their lowest since December 2021
In volatile trade, Brent crude futures for May rose 82 cents, or 1.1% to $73.79 a barrel. U.S. West Texas Intermediate crude futures for April gained 90 cents, or 1.4%, at $67.64
Brent has fallen by more than 10% since Friday's close, while U.S. crude is down more than 14%.
For April, Indian refiners Reliance Industries Ltd and Nayara Energy have reportedly snapped up at least five of the about 33 ESPO crude cargoes due to low prices.
Demand was the highest recorded in data compiled by the Indian Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) going back to 1998.