Oil futures rose Friday, lifted by the prospect of a production cut by the Organization of the Petroleum Exporting Countries and their allies next week.
However, crude was still set for a large monthly decline, feeling pressure in September on rising fears that aggressive tightening by central banks will spark a global economic slowdown. A surge by the U.S. dollar versus major currencies has also weighed on crude prices.
Price action
-
West Texas Intermediate crude for November delivery
CL.1,
-0.46% CLX22,
-0.46%
rose 35 cents, or 0.4%, to $81.58 a barrel on the New York Mercantile Exchange, on track for a 3.6% weekly gain. -
December Brent crude
BRN00,
-0.55% BRNZ22,
-0.55% ,
the global benchmark, was up 44 cents, or 0.5%, at $87.62 a barrel on ICE Futures Europe, heading for a 2.9% weekly gain. November Brent
BRNX22,
-0.05% ,
the soon-to-expire front month, was up 55 cents, or 0.6%, at $89.04 a barrel. -
Back on Nymex, October gasoline
RBV22,
-1.30%
fell 0.5% to $2.39 a gallon, while Ocober heating oil
HOV22,
-2.08%
fell 1.8% to $3.352 a gallon. -
November natural gas
NGX22,
+1.06%
rose 1.1% to $6.949 per million British thermal units.
Market drivers
Crude was bouncing back after both WTI and Brent fell to eight-month lows early this week. Attention has turned to a meeting next week of OPEC+ amid news reports that Russia has suggested the group cut output by 1 million barrels a day.
Cuts would benefit Russia “because it will need to find new buyers for its oil when the [European Union] embargo comes into force in early December and will presumably have to make further price concessions to do so. Higher prices beforehand — boosted by production cuts elsewhere — would therefore doubtless be very welcome,” wrote commodity analysts at Commerzbank, in a note.
OPEC+ runs the risk of disappointing the market, the analysts said.
“Even though OPEC+ is likely to emphasize its willingness to act in its press statement, prices will probably fall if only a small production cut is agreed. Any such cut would need to amount to at least 500,000 barrels per day to lend support to prices,” they said.
The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, pulled back after hitting a 20-year high earlier this week. The index was headed for a 0.8% weekly fall.
A stronger dollar can weigh on oil and other commodities priced in the currency, making them more expensive to users of other currencies.
