Oil prices rose on Tuesday as optimism over OPEC+’s potential Wednesday agreement to significantly reduce petroleum supply outweighed worries about the state of the world economy.
After rising by more than 4% the previous day, Brent crude was up 64 cents, or 0.7%, to $89.50 per barrel at 0823 GMT. After increasing by more than 5% the previous day, U.S. crude futures increased by 46 cents, or 0.6%, to $84.09 per barrel. At their first in-person meeting since 2020 on Wednesday, the OPEC+ should reduce production by nearly 1 million BPD.
Here Is What Experts Predict
According to OPEC sources, individual members might make more voluntary cutbacks. This will make it the biggest reduction since the COVID-19 outbreak began.
Fitch Solutions stated in a note that they expect a big cut. It will assist in tightening the physical fundamentals and send an important signal to the market. According to Kuwait’s oil minister, OPEC+ will decide accordingly to ensure energy availability and advance the interests of producers and consumers. OANDA chief analyst Edward Moya said that despite the crisis in Ukraine, OPEC+ is stronger than ever and will do everything possible to ensure price stability here.
Following unprecedented production restrictions implemented in 2020 when the pandemic depressed demand, OPEC+ has increased output this year. But the organization has recently fallen short of its targets for output growth, missing in August by 3.6 million BPD.
According to Goldman Sachs (NYSE: GS), the significant drop in oil prices from recent highs justified the production target drop under consideration, reinforcing the bank’s positive perspective on the commodity. Oil prices fell for a fourth straight month amid COVID lockdowns in China, the world’s biggest oil consumer, consumption restrictions, pressure to raise interest rates, and a strong currency in international financial markets.
The most aggressive wave of rate increases by major central banks in decades has begun, raising concerns about a downturn in the world economy.