Oil companies are betting OPEC+ will talk production cuts to stem falling prices

Oil companies are betting OPEC+ will talk production cuts to stem falling prices
Oil companies are betting OPEC+ will talk production cuts to stem falling prices

MELBOURNE, Sept 2 (Reuters) – Oil prices rose on Friday on bets that OPEC+ will discuss production cuts at a meeting on September 5, but benchmarks were still on track for posting their worst weekly drop in four on COVID-19 fears edging in China and weak global growth will weigh on demand.

Brent crude futures rose $1.20, or 1.3%, to $93.56 a barrel at 0117 GMT, while US West Texas Intermediate (WTI) crude futures rose. jumped $1.16, or 1.3%, to $87.77 a barrel.

Both benchmark contracts slipped 3% in the previous session to hit two-week lows. Brent was heading for a weekly decline of almost 8% and WTI was on track to drop around 6% for the week.

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The Organization of the Petroleum Exporting Countries and its allies, collectively called OPEC+, are due to meet on September 5 amid falling prices and falling demand, even as top producer Saudi Arabia says supply remains tight.

ANZ commodities analyst Daniel Hynes said OPEC+ may be a bridge too far to agree to cut production, but the top Saudi producer will likely highlight what it sees as a disconnect between current prices and tight supply fundamentals.

“They will definitely try to talk the market as much as possible to better reflect what they see as a tight market, which is prone to other supply issues,” he said.

OPEC+ slashed its demand outlook this week, now forecasting demand to lag 400,000 barrels per day (bpd) in 2022, but it expects a market deficit of 300,000 bpd in its forecast scenario. basis for 2023. read more

“As Brent prices fall towards $90/barrel, the likelihood of an OPEC+ supply response at Monday’s meeting or into October increases,” said commodity analyst Baden Moore. at the National Australia Bank.

“We expect any OPEC+ supply cuts to have a significant impact on oil prices given the very low inventory levels globally, the limited capacity of supply alternatives and the current energy crisis in Europe,” Moore said.

In the short term, investors are worried about the impact of the latest COVID-19 restrictions in China, where the city of Chengdu was the latest to order a lockdown on Thursday that hit manufacturers like Volvo (VOLVb.ST). Read more

It came on the same day as data showed Chinese factory activity in August contracted for the first time in three months amid weaker demand, while power shortages and COVID-19 outbreaks have disrupted production. Read more

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Reporting by Sonali Paul in Melbourne; Editing by Tom Hogue

Our standards: The Thomson Reuters Trust Principles.

. oil companies bet OPEC will talk cuts production for stem fall of prices

. Oil companies betting OPEC talk production cuts stem falling prices

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