Oil Prices ascent as OPEC+ Nations hold their output targets steady:
Oil Prices ascent as OPEC+ Nations hold their output targets steady
Monday saw a little increase in oil prices as OPEC+ countries retained their output targets ahead of a European Union ban and the introduction of a price cap on Russian crude. Coinciding with the situation, several Chinese cities witnessed ease in Covid-19 curbs over the weekend positively influenced fuel demand.
While prices increased as much as 2 percent earlier in the day, gains were abraded both by the Brent and US West Texas Intermediate (WTI) contracts. Brent crude futures were last up 49 cents, or 0.6pc, to $86.06 a barrel, while WTI crude futures gained 51 cents, or 0.6pc, to $80.49 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day (bpd) from November through 2023.
The OPEC+ decision to keep production unchanged, along with weak economic data out of China, however, could reverse oil’s price gains, said Leon Li, a Shanghai-based analyst at CMC Markets.
“The current economic data of China is still weak, with a sharp decline in imports and exports, which reflects the sluggish domestic demand and the declining trend of the overseas economy. It is challenging to drive the demand for crude oil,” said Li.
Analysts said the OPEC+ decision was expected as major producers wait to see the impact of the EU import ban and Group of Seven (G7) $60-a-barrel price cap on seaborne Russian oil, with Russia threatening to cut supply to any country adhering to the cap.
“While OPEC remained steady on output over the weekend, I expect they will continue to balance the market,” said Baden Moore, head of commodity research at the National Australia Bank. “OPEC+ kept its output unchanged. Without further production reduction measures, oil prices may fall again.”
Business and manufacturing activity in China, the world’s second largest economy and top crude oil importer, have been hit this year amid strict zero-tolerance measures to curb the spread of the coronavirus.