Oil turns higher as OPEC+ agrees to miniscule production hike

Oil rallied as the Organization of Petroleum Exporting Countries agreed to a small production increase in September. 

West Texas Intermediate traded near $96 a barrel, moving higher after earlier declining as much as 1.5 per cent. 

OPEC and its allies will lift supply by just 100,000 barrels a day, a tiny fraction of the group’s overall output and a far smaller increase than it has added in recent months. While that was generally in line with a Bloomberg survey of traders and analysts who had expected the alliance them to keep output steady, it will provide little relief for oil market tightness.

“A bit mystified as to the point of doing 100,000 barrels a day rather than zero, for practical and measurement purposes it is zero,” said Paul Horsnell, head of commodities research at Standard Chartered Plc. The move is “in line with moving into a defensive mode and wanting to protect the downside” for prices, he added.

The muted additions to supply come after oil sank to the lowest close in more than five months earlier this week, giving up the bulk of the gains seen since Russia’s invasion of Ukraine. That drop came as investors fret about a global economic slowdown and on signs that some of the extreme strength in crude markets over recent months may be easing.

Prices

  • WTI for September delivery rose 1.5 per cent to $95.85 a barrel by 8:07 a.m. in New York.
  • Brent for October settlement was 1.2 per cent higher at $101.70 a barrel.

© 2022 Bloomberg L.P.

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