Oil jumps nearly $4 as OPEC+ weighs biggest output cut since 2020

  • OPEC+ eyes cut of more than 1 million bpd – sources
  • Rising interest rates and strong dollar weigh on markets
  • EU ban on Russian maritime oil trader set for December 5

LONDON, Oct 3 (Reuters) – Oil prices jumped nearly $4 on Monday as OPEC+ plans to cut production by more than a million barrels per day (bpd) to support prices with what would be its biggest drop since the start of the COVID-19 pandemic.

Brent crude futures rebounded $3.46, or 4.1%, to $88.60 a barrel at 0915 GMT. U.S. West Texas Intermediate crude rose 4.3%, or $3.39, to $82.88.

Oil prices have fallen for four straight months since June as COVID-19 lockdowns in top energy consumer China hurt demand, while rising interest rates and rising US dollar weighed on global financial markets.

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To support prices, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, are considering a production cut of more than 1 million bpd ahead of Wednesday’s meeting, said OPEC+ sources told Reuters. Read more

If agreed, it will be the group’s second consecutive monthly cut after cutting production by 100,000 bpd last month.

“The backdrop for this week’s meeting is precarious, but oil fundamentals are relatively sound,” said Peter McNally, global head of energy at investment research firm Third Bridge.

“The two biggest question marks are the demand outlook (especially in China) and what will happen to Russian supply after the EU ban comes into force on December 5. “

OPEC+ missed its production targets by nearly 3 million bpd in July, two sources from the producer group said, as sanctions imposed on some members and weak investment by others hampered its ability to increase production . Read more

While fast Brent prices could strengthen further in the immediate short term, concerns over a global recession should limit the upside, consultancy FGE said.

“If OPEC+ decides to cut production in the near term, the resulting increase in OPEC+ spare capacity will likely put more downward pressure on prices in the long term,” he said. said Friday in a note.

The dollar index fell for the fourth straight day on Monday after hitting its highest level in two decades. A cheaper dollar could boost demand for oil and support prices.

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Reporting by Noah Browning Additional reporting by Florence Tan and Muyu Xu Editing by David Goodman

Our standards: The Thomson Reuters Trust Principles.

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