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Oil prices were little changed during Asian trade on Friday,
though were headed for their first weekly gain in five weeks,
underpinned by a weaker U.S. dollar and the possibility that OPEC+
may agree to cut crude output when it meets on Oct. 5, Trend reports with reference
to Reuters.
Brent crude futures for November, which expire on Friday, inched
down 10 cents or 0.1% to $88.39 a barrel by 0303 GMT, after losing
83 cents in the previous session. The more active December contract
was unchanged at $87.18.
U.S. West Texas Intermediate (WTI) crude futures for November
delivery rose 0.1% or by 9 cents to $81.32 a barrel, after falling
92 cents in the previous session.
“A deteriorating crude demand outlook won’t allow oil to rally
until energy traders are confident that OPEC+ will slash output at
the October 5th meeting,” Edward Moya, senior analyst with OANDA,
said in a client note.
“The weakness with crude prices is somewhat limited as the
dollar softens going into quarter-end.”
Both Brent and WTI are however on track to rise by about 3% for
the week, their first weekly rise since August, after hitting
nine-month lows earlier in the week.
Oil prices were shored up by a drop in the dollar from 20-year
highs earlier in the week. A weaker greenback makes
dollar-denominated oil cheaper for buyers holding other currencies,
improving demand for the commodity.
For all of September, Brent is set to drop by 8.4%, down for a
fourth month. During the third quarter, Brent has plunged 23%, its
first quarterly loss since the fourth quarter of 2021.
WTI is set to fall by 9.3% in September, also its fourth monthly
decline, and it dropped by 23% during the quarter, the first
quarterly slump since the period ending in March 2020 when COVID-19
slammed demand.
Analysts said the market appeared to have found a floor, with
supply set to tighten as the European Union will ban Russian oil
imports from Dec. 5. However, the key unknown is how much demand
will drop as global growth slows in the face of aggressive interest
rate hikes.
“Fundamentally, I still think prices are likely to move higher
from here on tightening of Russian sanctions and with low global
crude inventories, and the SPR (U.S. Strategic Petroleum Reserve)
supplies falling off,” said National Australia Bank commodities
analyst Baden Moore.
“I expect OPEC is well positioned to manage supply to offset
risks to demand,” he said.
Leading members of the Organization of the Petroleum Exporting
Countries (OPEC) and allies led by Russia, together called OPEC+,
have begun discussing an output cut ahead of their meeting on
Wednesday, three people told Reuters.
Russia could suggest a cut of up to 1 million barrels per day, a
person familiar with Russian thinking on the matter said earlier
this week.
“In August, OPEC+ production was estimated at around 3.37
million barrels per day below target production levels. So in
reality, any cut in supply will likely be smaller than whatever
figure the group announces,” said ING Economics in a note.
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