Crude oil prices increased on Friday as traders anticipated that OPEC+ would discuss output cuts at their meeting on September 5. However, worries over China’s COVID-19 restrictions and the state of the world economy also hung over the market. Compared to US crude, Brent crude futures increased by 66 cents to settle at $93.02 per barrel.
West Texas Intermediate (WTI) crude futures gained 26 cents to close at $86.87 per barrel. In the previous session, both benchmarks fell 3% to two-week lows. WTI saw a weekly decline of 6.7%, while Brent fell 7.9%.
On weekly chart, it can be seen that US crude futures exceeded the last week’s high before declining and closing below it. Eli Tesfaye, the senior market strategist at RJO Futures in Chicago, believes that is a bearish indicator. “When you take out the week’s high, week’s low, and then close lower, that’s a reversal down – it’s a signal that there’s weakness, and that’s telling you it’s a weak market,” Eli said.
The Organization of the Petroleum Exporting Countries and allies led by Russia, sometimes known as OPEC+, are scheduled to meet on September 5 against anticipated decreases in demand, even if the supply is still tight, according to Saudi Arabia.
At its meeting on Monday, OPEC+ is likely to maintain its crude oil output caps for October, according to three OPEC+ sources. However, some heads did not completely rule out a production cut to support crude oil prices, which have fallen from their record highs earlier this year.
This week, OPEC+ updated market balances for this year and expected demand to outpace supply by 400,000 barrels per day (BPD), down from the prior prediction of 900,000 BPD. For 2023, producer group projects market deficit of 300,000 BPD. Iran claimed that its response to American suggestions to revive the 2015 nuclear agreement between Tehran and the P5+1 powers was “constructive.” The United States evaluation was less enthusiastic.
According to Phil Flynn, an analyst at Price Futures Group in Chicago, the news bolstered oil prices, but some investors were pessimistic that a deal was about to be reached. The G7 finance ministers decided to cap the price of Russian oil on Friday, but they provided few new details on the plan to keep the flow of petroleum to keep prices from rising while limiting funding for Moscow’s battle in Ukraine.
Employers in the US added more workers than anticipated in August, but a jump in the unemployment rate to 3.7% and weak pay growth may lessen pressure on the Federal Reserve to deliver a third 75 basis-point interest rate boost this month.
For the fourth time in five weeks, American energy companies reduced the number of activec rude oil and gas rigs. The number of crude oil and gas rigs in the United States dropped from 760 to 760 in the week ending September 2, according to data released on Friday by Baker Hughes Co.
Following the discovery of an oil leak in the main gas turbine at the Portovaya compressor station near St. Petersburg, Russia’s Gazprom announced on Friday that natural gas deliveries via the Nord Stream 1 pipeline would stay cut off. The effects of the most recent COVID-19 limitations in China continue to worry investors. The city of Chengdu imposed a lockdown on Thursday, which has had an effect on companies like Volvo.
According to data, weakening demand, power outages, and COVID-19 outbreaks all contributed to a fall in manufacturing activity in China in August for the first time in three months. In the week ending on August 30, money managers reduced their net long positions in US crude futures and options by 10,607 contracts, to 168,431, the US Commodity Futures Trading Commission (CFTC) reported on Friday.
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