OPEC+ Output Speculation And China COVID Limits Boost Oil Prices

(CTN NEWS) – Oil climbed almost $1 a barrel on Thursday, bolstered by the potential for OPEC+ to cut supplies further and ease COVID regulations in China.

Crude benefited from dollar weakness caused by eurozone industrial statistics and the Federal Reserve Chair indicating rate hikes could be slowed.

A weakening dollar makes gasoline cheaper for foreigners and boosts risk assets.

Oil buoyed by OPEC+ output speculation and easing China COVID curbs https://t.co/hNcgP941qB

— Yahoo Finance (@YahooFinance) December 1, 2022

OPEC+, which includes Russia, meets on Dec. 4. Wednesday sources indicated a policy change is unlikely, but others believe a further cut is possible.

“OPEC+ forces shorts to cover, but the consensus is stable quota levels,” said oil broker Tamas Varga.

Too much oil.
"There is a demand deficit and/or supply surplus," said Tamas Varga of oil broker PVM."https://t.co/9RkwaXMMA3

— Antonia Juhasz (@AntoniaJuhasz) November 28, 2022

The dollar’s decline and the perceived loosening of Chinese COVID restrictions support prices.

Brent crude rose 94 cents, or 1.1%, to $87.91 a barrel by 1250 GMT, while U.S. WTI crude futures rose $1.18, or 1.5%, to $81.73.

China’s apparent turn away from zero-COVID boosts oil demand optimism. Guangzhou and Chongqing eased COVID restrictions Wednesday.

“China’s signals appear good,” said OANDA’s Craig Erlam. Any softening of COVID-zero is welcome.

Both oil benchmarks have posted three straight weekly drops, though the market has returned sharply after touching its lowest in nearly a year on Monday. Brent hit $80.61 on Jan. 4.

Analysts say a reduced Russian oil price cap is also helping. EU countries are nearing a price cap accord before Dec. 5. Weekly data on U.S. crude inventories also boosted prices.

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