In early Monday trading, oil prices surged after the Organization of Petroleum Exporting Countries Plus (OPEC+) postponed reversing a layer of output cuts.
West Texas Intermediate (WTI) December crude futures rose 1.18% to $70.67 per barrel on the morning of November 04. Furthermore, analysts anticipate a 0.18% increase to $70.80 in the following market session.
Similarly, Brent oil futures for December delivery soared by 0.16% to $74.29. Moreover, commodity specialists expect a 0.26% spike to $74.41 on the coming trading day.
On Sunday, OPEC+ announced that it will defer its December plan to cancel 180,000 barrels per day (bpd) of yield reductions for a month. This reversal would start the phasing-out process involving a layer of production cuts worth 2.20 million bpd.
Softening Asian demand pressured petroleum prices, with LSEG Oil Research approximating October arrivals at 26.75 million bpd, down 1.11% from 27.05 million bpd in September. The group also estimates Asia’s year-to-date black gold imports at 26.78 million bpd, shedding 200,000 bpd year-over-year.
In contrast, the fuel commodity found support after the EIA reported an unexpected draw of 0.52 million barrels last week. This figure defied the market consensus of a 1.50-million-barrel-build and followed an increase of 5.47 million barrels in the preceding reading.
OPEC+ Signals Willingness to Support Oil Prices
Sunday’s decision marked the second time OPEC+ delayed unwinding some of its oil output cuts, initially slated for October. Thus, industry watchers claim that the bloc is more open to supporting crude prices than expected.
In addition, analysts noted that making significant moves will be too risky amid mounting geopolitical uncertainties in the Middle East. Last week, Israeli Intelligence cautioned that Iran was preparing a massive strike on Israel in the coming days.
Lastly, the market expects a boost from expectations of a 25.00 bps Federal Reserve rate cut on Thursday. Lower borrowing costs stimulate economic activity, strengthening the demand and consumption of oil and other energy commodities.
