- OPEC+ considers cutting more than 1 million bpd wells
- China is issuing the largest quota for oil products this year
SINGAPORE (Portal) – Oil prices rose more than 3% in early Asian trade on Monday as OPEC+ considers cutting production by more than 1 million barrels a day, the biggest cut since the pandemic hit to support market .
Brent crude futures rallied $2.51, or 3%, to $87.65 a barrel by 0206 GMT after settling down 0.6% on Friday. US West Texas Intermediate crude was also up 3%, or $2.39, to $81.88 a barrel, after shedding 2.1% in the previous session.
Oil prices have fallen for four straight months since June as COVID-19 lockdowns in the biggest energy consumer China hurt demand, while rising interest rates and a strengthening US dollar weighed on global financial markets.
To prop up prices, the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, are considering a production cut of more than 1 million barrels a day ahead of Wednesday’s meeting, OPEC+ sources told Portal. Continue reading
If agreed, this will be the group’s second consecutive monthly cut after reducing production by 100,000 bpd last month.
However, OPEC+ missed its production targets by nearly 3 million bpd in July, two producers group sources said, as sanctions on some members and low investment by others hampered their ability to ramp up production. Continue reading
“Anything below 500,000 barrels a day would be taken out of the market. As such, we see a significant opportunity for a cut of up to 1 million barrels per day,” ANZ analysts said in a statement.
While prompt Brent prices could continue to rise in the near term, concerns over a global recession are likely to limit upside potential, consultancy FGE said.
“If OPEC+ decides to curb production in the short term, the resulting increase in OPEC+ spare capacity is likely to put more downward pressure on long-term prices,” a statement said on Friday.
Also on Friday, China announced its biggest quota for exports of oil products this year and increased crude oil import quotas for independent refiners. read on read on
State and private refiners can export up to 15 million tons of gasoline, diesel, jet fuel and low-sulphur heating oil, bringing much-needed supplies to global markets to replace Russian exports, which the European Union embargoed in February.
But analysts and traders said some of China’s exports are likely to spill over into early 2023 as refiners will take time to ramp up.
Reporting by Florence Tan; Adaptation by Clarence Fernandez
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