Oil futures extended gains early Friday, on track for a sharp weekly bounce, after OPEC+ earlier this week agreed to a large cut in its output target.
Price action
-
West Texas Intermediate crude for November delivery
CL.1,
+0.98% CLX22,
+0.98%
rose $1.03, or 1.2%, to $89.48 a barrel on the New York Mercantile Exchange. -
December Brent crude
BRN00,
+0.91% BRNZ22,
+0.91% ,
the global benchmark, was up $1, or 1.1%, at $95.42 a barrel on ICE Futures Europe. -
Back on Nymex, November gasoline
RBX22,
+0.51%
rose 0.8% to $2.702 a gallon, while November heating oil
HOX22,
+1.09%
was up 0.9% at $3.90 a gallon. -
November natural gas
NGX22,
-2.78%
fell 2.9% to $6.77 per million British thermal units.
Market drivers
Brent and WTI were both on track for weekly gains of more than 12%, based on the most actively traded contracts. The OPEC+ — made up of the Organization of the Petroleum Exporting Countries and their Russia-led allies — agreed on Wednesday to cut its output target by 2 million barrels a day.
“By formally reducing the daily production quota by 2 million barrels, OPEC+ is doing its utmost to avert a price slump on the oil market,” said analysts at Commerzbank, in a Friday note. “Though daily output is in reality likely to decline by only 1 million barrels because many countries are already producing well below quota, this would still be enough to prevent the surplus that has been predicted for the final quarter of this year,”
See: What’s next for oil prices after OPEC+ delivers a big production cut
The European Union’s embargo on Russian oil purchases and the possible implementation of a price cap on Russian oil are coming ever closer, which could prompt Russia to further cut its production, while no significant expansion of non-OPEC supply is in sight, either, the analysts wrote.
“Against this backdrop, a whole series of bad economic news would probably be needed to put any substantial pressure on prices again,” they said.
Crude fell sharply last month, with WTI and Brent testing eight-month lows as investors reacted to fears aggressive tightening by global central banks would send the economy into a sharp downturn.
Also see: What’s in store for natural gas, oil and iron ore in the fourth quarter?
