Brent oil climbs above $100 a barrel amid talk about OPEC cuts

An aerial view shows tugboats helping an oil tanker to dock at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS

LONDON, Aug 24 (Reuters) – The Brent oil benchmark rose above $100 a barrel on Wednesday after Saudi Arabia suggested this week that OPEC could consider cutting output in response to weak liquidity in the crude oil futures market and fears of a global economic slowdown.

Brent for October settlement hit a three-week high, trading up $1.30, or 1.3%, at $101.52 a barrel as of 0850 GMT. U.S. crude rose $1.18, or 1.3%, to $94.92 a barrel.

Contracts for both crudes soared on Tuesday after Energy Minister Prince Abdulaziz bin Salman signaled the possibility of production cuts amid low futures market liquidity and macroeconomic fears. Read more

OPEC sources later told Reuters that any cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, would likely coincide with an Iranian market comeback if Tehran strikes a nuclear deal. with world powers. Read more

A US official said on Monday that Iran had dropped some of its key demands for a deal resurrection. Read more

OPEC+ is already producing 2.9 million barrels a day below its target, sources said, complicating any decision on cuts or how to calculate the baseline for a production cut. Read more

“The oil price and supply outlook suggests that an OPEC+ cut is not currently warranted,” said PVM analyst Stephen Brennock, outlining possible supply threats that underpin the market.

“Global oil supply could be impacted as hurricane season approaches in the United States,” he said. “Elsewhere, future supply blackouts in Libya cannot be ignored as Nigeria’s oil fortunes show few signs of improving.”

U.S. crude inventories fell about 5.6 million barrels for the week ended August 19, according to market sources citing figures from the American Petroleum Institute. Analysts had estimated a drop of 900,000 barrels in a Reuters poll.

US government figures are due out on Wednesday.

Market participants will watch Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole central bank symposium on Friday. He should underscore the Fed’s emphasis on controlling inflation.

Additional reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo

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