Oil climbs as risk appetite grows, and focus returns to supply outlook. After falling at the end of the previous week, oil prices rose $1 on Monday as investors’ attention moved to a tight global supply forecast, and some risk appetite was restored by a last-minute agreement that prevented a U.S. government shutdown.
By 1124 GMT, Brent December oil futures had increased $1.04 to $93.24 per barrel after dropping 90 cents on Friday. At the contract’s expiration on Friday, Brent November futures had finished 7 cents down at $95.31 a barrel.
U.S. West Texas Intermediate oil futures reduced gains that had increased the contract by more than $1, and at last update, they were 96 cents higher at $91.75 a barrel after falling 92 cents on Friday.
After Saudi Arabia and Russia extended additional production cutbacks until the end of the year, both benchmarks increased by about 30% in the third quarter on expectations of a significant oil supply deficit in the fourth quarter.
At a crucial meeting on Wednesday, the Organization of the Petroleum Exporting Countries (OPEC+), which includes Russia and other allies, is unlikely to alter its current oil output strategy, according to four OPEC+ sources who spoke to Reuters.
Hiroyuki Kikukawa, president of NS Trading, said, “oil prices started the week on a strong note amid supply concerns with no policy change by OPEC+ expected, while the avoidance of a U.S. government shutdown over the weekend gave some relief.”
During a Monday event, OPEC Secretary Haitham Al Ghais stated that the organization still believes “oil demand is quite resilient this year, as it was last year.” According to a Reuters poll released Monday, OPEC oil output increased in September for the second consecutive month, driven by rises in Nigeria and Iran despite reductions by Saudi Arabia.
Turkey will resume operations on an Iraqi pipeline this week to inject extra oil supplies into the system, the country’s energy minister announced Monday. The pipeline’s operations had been interrupted for around six months.
Additionally, according to ING analysts in a note published on Monday, Saudi Arabia may begin to soften its extra voluntary supply reduction of 1 million barrels per day (bpd).
According to the Saudis, there is still anxiety about Chinese demand. However, the PMI figures released over the weekend will offer some assurance. According to official statistics released on Saturday, China’s manufacturing activity increased in September for the first time in six months, adding to a string of signs that the world’s second-largest economy has started to stabilize.
The eurozone, Germany, and Britain continued to slump in September despite the better China news, which was terrible news for the oil demand.
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