Oil jumped to $82 a barrel as the OPEC+ alliance will consider cutting production by more than 1 million barrels a day to stop price drops at a meeting this week.
The cuts will be the strongest since the pandemic, although OPEC+ delegates said a final decision on the amount of cuts will not be made until ministers meet in Vienna on Wednesday. West Texas Intermediate rose more than 2%, leading to the first rise in prices in three sessions.
“The slide in oil prices is likely over,” said Ed Moya, senior market analyst at Oanda Group. “Energy traders turned pessimistic over the summer given global slowdown fears, but now it seems the risks for oil are to the upside.”
Oil fell by a quarter in the three months to September as the slowdown in the global economy reduced demand. The banks said the Organization of the Petroleum Exporting Countries and its partners should cut production by at least 500 000 barrels daily to stabilize prices.
A major cut in production could bring pressure from the US and other consuming countries, where energy-driven inflation has forced central banks to hike interest rates rapidly. This week’s OPEC+ meeting will be the first face-to-face meeting since March 2020. The group decides on deliveries for November.
Meanwhile, China imposed new quotas on fuel exports and crude oil imports last week, bolstering a bullish forecast for oil. As the world’s largest importer of crude oil, China has seen its energy demand plummet due to lockdowns and a sharp fall in property prices this year.
Energy analysts say that in the near future, the oil will return to $100 per barrel, especially given the reduction in supplies by the end of the year.
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