Oil pares drop with OPEC+ cuts weighed against growth outlook

Oil traded near $82 a barrel as traders weighed a clouded outlook for global economic growth against the potential for output cuts from the OPEC+ producer group.

West Texas Intermediate futures pared an earlier decline to trade little changed. The Organization of Petroleum Exporting Countries and its allies are discussing cutting output at a meeting next week, a delegate said, a move that could serve to stem a recent slump in prices. 

While crude is on track for a weekly gain, futures are still heading for the first quarterly decline in more than two years as fears of a potential recession hang over the market. The dollar has spiked this month and is trading near a record, making commodities priced in the US currency less attractive to investors.

At the same time, however, the market’s structure has firmed in recent days, indicating tighter supplies.

“Headwinds continue and the path will continue to be choppy,” said Keshav Lohiya, founder of consultant Oilytics. “However, backwardation continues to get strong in crude oil and diesel. Either flat price is too cheap or structure is too strong.”

The European Union announced a new round of sanctions against Russia that would ban European companies from shipping the OPEC+ producer’s oil to third countries above an internationally set price cap. Tensions have escalated after natural gas pipelines were damaged in suspected sabotage.

Prices

  • WTI for November delivery was little changed at $82.08 a barrel at 10:29 a.m. in London, after earlier falling as much as 2.2 per cent.
  • Brent for November settlement slipped 0.2 per cen to $89.13 a barrel.

US crude stockpiles unexpectedly declined last week, while gasoline supplies also fell, according to data from the Energy Information Administration on Wednesday. Inventories at the storage hub at Cushing, Okla., rose.

© 2022 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.