Oil jumps as OPEC+ speculation, Mood lifts China’s Covid press conference

(Bloomberg) – Oil rose on expectations that the Organization of the Petroleum Exporting Countries and its allies would deepen supply cuts and speculation that China might ease Covid-0 containment measures after protests. outbreak in the largest importer.

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West Texas Intermediate spiked to $79 a barrel, after surging on Monday following a report that OPEC+ may consider limiting supply as members meet to assess output policy over the weekend. this. Early in the week’s trading session, crude oil prices fell to their cheapest levels since December as rising Covid-19 cases and protests against virus restrictions across China took a toll. source of raw materials.

Officials in China will hold a briefing on Covid prevention and control measures at 3pm in Beijing, boosting returns from risk assets including commodities and stocks. At the same time, the dollar – which benefited from weekend unrest in China – weakened, supporting US currency-denominated commodities.

Oil has lost about 9% this month as tighter monetary policy sets the stage for a global slowdown that could jeopardize energy consumption. Those concerns, as well as doubts about demand in China, prompted OPEC+ to announce massive output cuts last month, and group delegates now say further cuts could be an option. Ahead of the meeting, widely watched market data pointed to ample crude oil supplies in the short term.

“There is a short-term risk to the demand outlook,” said Charu Chanana, chief market strategist at Saxo Capital Markets Pte in Singapore. “OPEC+ is likely to remain more concerned about the negative technical picture in the oil market and that is likely to force the group to react.”

Market watchers are pondering the alliance’s next move. Industry consultant FGE said the group may decide to reduce output by another 2 million barrels at its December 4 meeting to combat a faltering market, while RBC Capital Markets said it expected no change. change supply or drop by as much as 1 million barrels, depending in part on how volatile prices are this week.

The OPEC+ meeting is scheduled a day before European Union sanctions on the flow of Russian crude take effect on December 5, along with restrictions on access to insurance and services. other. Negotiations among EU diplomats to agree on a price ceiling for Russian oil, part of the package, have stalled. This measure is intended to deprive Russia of revenue after the invasion of Ukraine. The country said it would not sell crude oil to countries that adhere to the cap.

The market’s major indexes have weakened significantly this month, with the spread quickly – the difference between the two most recent contracts – for both Brent and WTI oil turning into a bearish-carrying pattern. The gap for Brent is 69 cents a barrel in contango, compared with $1.32 in a pullback two weeks ago.

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