Oil continues to rise in price after a significant jump in prices the day before
Today, oil prices continue to rise, the market is waiting for the meeting of the OPEC + states, during which a decision may be made to reduce the quota for oil production. According to Bloomberg, citing sources in OPEC +, the alliance will discuss the possibility of cutting production by more than 1 million barrels per day.
The meeting of the OPEC+ Ministerial Monitoring Committee (JMMC), as well as the OPEC+ Ministerial Meeting, will be held in person at the OPEC Secretariat in Vienna on October 5. Since March 2020, meetings have been held via videoconferencing.
The cost of December futures for Brent oil on the London ICE Futures exchange by this hour was $89.28 per barrel, which is $0.42 (0.47%) higher than the closing price of the previous session. As a result of trading on Monday, these contracts rose by $3.72 (4.4%) to $88.86 per barrel.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.24 (0.29%) to $83.87 per barrel. By the close of the market on Monday, the value of these contracts increased by $4.14 (5.2%) to $83.63 per barrel.
“We expect a significant reduction in the OPEC+ quota on paper, but in reality it will be much less,” said Warren Patterson, who is in charge of commodity markets strategy at ING Groep NV in Singapore.
“A decrease of 1 million barrels per day will mean a real decrease in production by less than 400 thousand barrels per day,” Bloomberg quoted the expert as saying.
Since September last year, a number of OPEC+ countries have lagged behind their planned production levels due to lack of investment, due to military clashes and sanctions. At the same time, the overall OPEC + quota increased, which allowed countries that can increase production to do so. In September of this year, OPEC + ministers decided to reduce the quota for October by 100,000 barrels per day.
Oil prices fell 25% in the past quarter amid signals of a weakening global economy as a result of the rapid tightening of monetary policy by global central banks, including the Federal Reserve. Experts fear a global recession and, consequently, a decline in demand for oil.