OPEC+ output cut, lower dollar support oil prices

Key Points

• Futures contracts on U.S. West Texas Intermediate crude for November delivery climbed 6 cents to $81.29 per barrel at 00:54 GMT, recouping 92 cents from the previous session's loss.
• Brent oil futures for November expiring this Friday rose 2 cents to $88.51 a barrel, recouping 83 cents from the previous session's loss. December's more active contract rose by 1 cent to $87.19.

Above is a picture of the Phillips 66 oil refinery in Linden, New Jersey.

Initial trading on Friday found oil prices relatively unchanged. However, they were still on track for their first weekly rise in five weeks, thanks to a weaker U.S. dollar and speculation that OPEC+ may agree to cut petroleum output at its meeting on October 5.

U.S. Light, Sweet, or West Texas Intermediate

After dropping by 92 cents the previous day, November futures climbed 6 cents to $81.29 per barrel at 00:54 GMT.

Crude Oil from Brent

Futures for November, which expire on Friday, rose 2 cents to $88.51 a barrel after falling 83 cents the previous day. December's more active contract rose by 1 cent to $87.19.

Brent and WTI are projected to rise 3% this week after hitting nine-month lows.

Brent is predicted to fall by 8% during the entire month of September, marking the fourth consecutive monthly decline.

Brent has fallen 23% during the third quarter, marking the first quarterly decline since the fourth quarter of 2021.

WTI is expected to fall by 9% in September, marking its fourth consecutive monthly reduction. WTI fell by 23% in the past quarter, marking its first quarterly downturn since the quarter ending in March 2020, when Covid-19 slammed demand.

With supplies expected to tighten due to the European Union's embargo on Russian oil imports beginning on December 5, analysts said the market appeared to have found a floor. How much will demand decline if interest rate hikes slow the global economy?

According to National Australia Bank commodities analyst Baden Moore, "fundamentally, I still think prices are likely to trend higher from here on tightening of Russian sanctions and with low global oil inventories, with the SPR (U.S. Strategic Petroleum Reserve) supplies tapering off."

I think OPEC is in an excellent position to manage supply to counteract risks to demand," he said.

Three sources told Reuters that leading members of the Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, have begun negotiating an output cut ahead of their meeting on Wednesday.

According to a person acquainted with Russian thinking, Russia could propose a cut of up to 1 million barrels per day.

The dollar's fall from earlier this week's 20-year highs also bolstered oil prices. Since oil is priced in dollars, a decline in the dollar's value boosts oil's appeal to consumers using other currencies.