Oct 2, 2023: Oil prices climbed $1 on Monday after suffering losses at the end of last week, as investors’ focus returned to a tight global supply outlook while a last-minute deal that avoided a U.S. government shutdown restored some risk appetite.
Brent December crude futures rose $1.04 to $93.24 a barrel by 1124 GMT after falling 90 cents on Friday. Brent November futures had settled 7 cents lower at $95.31 a barrel at the contract’s expiry on Friday.
U.S. West Texas Intermediate crude futures pared gains that had lifted the contract by more than $1 and were last 96 cents higher at $91.75 a barrel after losing 92 cents on Friday.
Both benchmarks rallied nearly 30% in the third quarter on forecasts of a wide crude supply deficit in the fourth quarter after Saudi Arabia and Russia extended additional supply cuts to the end of the year.
The Organization of the Petroleum Exporting Countries with Russia and other allies, or OPEC+, is unlikely to tweak its current oil output policy at a key meeting on Wednesday, four OPEC+ sources told Reuters.
“Oil prices started the week on a strong note amid supply concerns with no policy change by OPEC+ expected, while the avoidance of a U.S. government shutdown over the weekend gave some relief,” said Hiroyuki Kikukawa, president of NS Trading.
Speaking at an event on Monday, OPEC Secretary General Haitham Al Ghais said the group still sees “oil demand as quite resilient this year, as it was last year.”
A Reuters survey on Monday showed OPEC oil output rose for a second straight month in September, led by increases in Nigeria and Iran despite cuts by Saudi Arabia.
Pumping more crude supply into the system, Turkey will restart operations this week on a pipeline from Iraq that has been suspended for about six months, Turkey’s energy minister said on Monday
Additionally, Saudi Arabia could start to ease its additional voluntary supply cut of 1 million barrels per day (bpd), said ING analysts in a note on Monday.
“The Saudis have said that there is still concern over Chinese demand. However, PMI data out over the weekend will provide some confidence.”
Official data on Saturday showed that China’s factory activity expanded for the first time in six months in September, adding to a run of indicators suggesting the world’s second-largest economy has begun to stabilise.
Despite the brighter China news, European manufacturing data showed the euro zone, Germany and Britain all remained mired in a downturn in September – bad news for oil demand.
Source Courtesy: Reuters