Oil futures saw small gains Thursday, with pressure from a renewed rise by the U.S. dollar offset by prospects for a production cut by the Organization of the Petroleum Exporting Countries and its allies.
Price action
-
West Texas Intermediate crude for November delivery
CL.1,
+0.10% CLX22,
+0.10%
rose 28 cents, or 0.3%, to $82.43 a barrel on the New York Mercantile Exchange. -
December Brent crude
BRN00,
+0.09% BRNZ22,
+0.09% ,
the most actively traded contract for the global benchmark, was up 33 cents, or 0.4%, at $ $88.38 a barrel on ICE Futures Europe. November Brent
BRNX22,
+0.09% ,
the soon-to-expire front month, was up 32 cents, or 0.4%, at $89.64 a barrel. -
Back on Nymex, October gasoline
RBV22,
-0.57%
fell 0.2% to $2.457 a gallon, while October heating oil
HOV22,
+0.99%
rose 1.1% to $3.486 a gallon. -
November natural gas
NGX22,
+0.16%
rose 1.4% to $7.054 per million British thermal units.
Market drivers
Oil has found support this week, bouncing off eight-month lows, as a rally by the dollar relented, after taking the U.S. Dollar Index
DXY,
to a 20-year high, while traders turned their attention to the prospect of a production cut by OPEC+.
But analysts said the tone for crude remains weak, with worries that aggressive monetary tightening by the Federal Reserve and other major central banks will sink the global economy, outweighing worries over the Russia-Ukraine war and other supply concerns.
“The lack of a disruption risk premium makes it clear: The market fears Fed Chair Powell more than it fears escalatory conduct from Vladimir Putin or OPEC’s ability to defend the market,” said Michael Tran, commodity analyst at RBC Capital Markets, in a note.
A statement from the North Atlantic Treaty Organization said all “currently available information” points to the damage to the Nord Stream 1 and 2 pipelines that has resulted in a series of leaks was the result of “deliberate, reckless, and irresponsible acts of sabotage.” NATO did not identify a perpetrator.
OPEC+ members have discussed a potential production cut ahead of a meeting next week, Reuters reported. The report said Russia could suggest a cut of up to one million barrels a day.
Tran, however, said OPEC+ faces a dilemma after Saudi Arabia previously complained of a disconnect between a soft futures market and a tight physical market.
“The group symbolically cut 100,000 barrels a day earlier this month. Larger cuts over the near term would signal a concession that physical demand is worse than initially assessed. Cut too little and the market shrugs it off,” Tran said. “That is the Catch-22.”
Crude also found some support from Hurricane Ian, which made landfall in Florida Wednesday as a violent Category 4 storm. The Bureau of Safety and Environmental Enforcement had estimated Wednesday afternoon that approximately 9.12% of the current oil production and 5.95% of the natural gas production in the Gulf of Mexico had been shut in.
See: Hurricane Ian: These stocks could feel the storm’s impact
