Oil rose for a third day as data pointed to a large decline in US oil stockpiles, while traders weighed the outlook for Chinese demand and a forthcoming OPEC+ meeting.
West Texas Intermediate climbed above $80 a barrel for the first time in a week after the industry-funded American Petroleum Institute reported inventories fell by almost 8 million barrels. At the same time, traders are watching the demand outlook in China as markets in Asia were buoyed by bets on its economy further reopening.
There are several vital days for the oil market ahead.
The European Union is yet to agree on a price cap for Russian oil with sanctions on the country’s exports due to come into effect on Dec. 5. The Organization of Petroleum Exporting Countries and allies including Russia will hold an online gathering Dec. 4, scrapping an in-person meeting in Vienna. While some expect the alliance to cut supply to counter market weakness, others now believe the change of plan signals a more straightforward rolling over of production levels.
Crude has recovered in recent days as EU discussions on a Russian price cap continue. Without the measures, companies will have no access to European or UK insurance when transporting the country’s crude, potentially risking supply disruption. European diplomats have been seeking a compromise on the level of the US-led cap, with US energy security adviser Amos Hochstein saying the plan needs to strike a “delicate balance.”
“Mobility in China is nowhere near down to the extent it warrants a $10 selloff seen recently,” said Ole Hansen, head of commodities strategy at Saxo Bank. “This is allowing the market to focus on the embargo and its potential negative impact on supply.”
- WTI for January delivery rose 2.3 per cent to $79.96 a barrel as of 10:54 a.m. in London.
- Brent for January settlement, which expires on Wednesday, gained 2.4 per cent to $85.01 a barrel.
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