Oil prices dipped on Sept. 30 in choppy trading but were on track for their first weekly gain in five, underpinned by the possibility that OPEC+ will agree to cut crude output when it meets on Oct. 5.
Brent crude futures for November, which expire on Sept. 30, fell 44 cents, or 0.5%, to $88.05/bbl by 11:18 a.m. ET (1718 GMT). The more active December contract was down $1.71 at $85.49.
WTI crude in the U.S. futures fell $1.34, or 1.7%, to $79.88.
Both contracts rose by more than $1 earlier in the session but dropped on news that OPEC’s oil output rose in September to its highest since 2020, surpassing a pledged hike for the month, according to a Reuters survey on Sept. 30.
“There is definitely some profit taking from the gains we saw earlier in the week. $80 is sort of the pivot point these days,” said John Kilduff, partner at Again Capital LLC in New York.
“Increased worries about financial stability in the U.K. and, and potentially spreading, is undermining the demand outlook once again,” Kilduff added.
While the dollar has dropped from 20-year highs earlier in the week, it rose with early U.S. trading. A stronger greenback makes dollar-denominated oil more expensive for buyers holding other currencies, reducing demand for the commodity.
“Price swings have become the norm as market players juggle worries over the global economy and the prospect of tightening oil supplies,” said Stephen Brennock of oil broker PVM.
Brent and WTI are still set for a weekly gain of around 2%. It would be the first weekly rise since August and follows nine-month lows hit this week.
The market has seen support from the prospect of OPEC and its allies considering cutting production quotas by between 500,000 and 1 million bbl/d at their Oct. 5 meeting.
“A deteriorating crude demand outlook won’t allow oil to rally until energy traders are confident that OPEC+ will slash output,” senior OANDA analyst Edward Moya said.
Analysts expect a production cut because demand fears linked to a possible global economic slowdown and rising interest rates have weighed on crude prices.
Brent and WTI prices are likely to finish the third quarter with a chunky 23% decline.
“Expect oil prices to receive a supportive kick up the backside next week,” PVM’s Brennock said.
Analysts also expect buying to lift as Russia prepares to annex four Ukrainian regions to Russia on Sept. 30 in a move that could force Western nations to strengthen sanctions against Moscow.
Recommended Reading
Segrist: The LNG Pause and a Big, Dumb Question
2024-04-25 - In trying to understand the White House’s decision to pause LNG export permits and wondering if it’s just a red herring, one big, dumb question must be asked.
Texas LNG Export Plant Signs Additional Offtake Deal With EQT
2024-04-23 - Glenfarne Group LLC's proposed Texas LNG export plant in Brownsville has signed an additional tolling agreement with EQT Corp. to provide natural gas liquefaction services of an additional 1.5 mtpa over 20 years.
US Refiners to Face Tighter Heavy Spreads this Summer TPH
2024-04-22 - Tudor, Pickering, Holt and Co. (TPH) expects fairly tight heavy crude discounts in the U.S. this summer and beyond owing to lower imports of Canadian, Mexican and Venezuelan crudes.
What's Affecting Oil Prices This Week? (April 22, 2024)
2024-04-22 - Stratas Advisors predict that despite geopolitical tensions, the oil supply will not be disrupted, even with the U.S. House of Representatives inserting sanctions on Iran’s oil exports.
Association: Monthly Texas Upstream Jobs Show Most Growth in Decade
2024-04-22 - Since the COVID-19 pandemic, the oil and gas industry has added 39,500 upstream jobs in Texas, with take home pay averaging $124,000 in 2023.