US President Joe Biden disappointment as cut from Opec and allies including Russia is the largest reduction since 2020
07 October 2022 - 07:58
byMohi Narayan
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Oil prices steadied on Friday ahead of key US economic data after rising more than 1% in the last session on cuts to Opec+ production targets.
Brent crude futures slipped 11c to $94.31 a barrel by 3.39am GMT. WTI crude futures were down 5c to $88.40 a barrel, after earlier hitting $89.37 per barrel, the highest since September 14.
A stronger dollar added pressure on oil prices amid a chorus of hawkish Federal Reserve speakers signalling further aggressive central bank policy tightening.
Fed officials showed no intention of backing down from the most aggressive rate hike campaign in decades, with Fed governor Lisa Cook, Chicago Fed president Charles Evans and Minneapolis Fed president Neel Kashkari all stressing that the inflation fight was ongoing and they were not prepared to change course.
Markets are keenly watching the US nonfarm payrolls report due later on Friday, with economists forecasting 250,000 jobs to have been added last month, compared with 315,000 in August.
“Oil is leaking lower in Asia, which is not so unusual after a big run-up heading into the weekend, especially against rising US yields and a stronger dollar providing the downdraft and triggering some pre-weekend and pre-nonfarm payroll profit-taking,” Stephen Innes, managing partner at SPI Asset Management said in a note.
However, both benchmarks were headed for weekly gains, fuelled by production cut announcement by Opec+.
The cut from Opec and allies including Russia, together known as Opec+, is the largest reduction since 2020 and comes ahead of a EU embargo on Russian oil. The decision would squeeze supplies in an already tight market, adding to inflation.
“Market sentiment was already bearish in anticipation of a weakening global economy, and this decision should further tighten the market,” analysts at ANZ Research said in a note.
Tightening monetary policy and China’s ongoing Covid-related movement restrictions mean global demand growth is expected to come under pressure, ANZ added.
US President Joe Biden expressed disappointment on Thursday over Opec+’s plans and he and officials said the US was looking at all possible alternatives to keep prices from rising.
Some of those options include releasing more oil from the Strategic Petroleum Reserve or exploring a curb on energy exports by US companies.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil holds steady amid Opec+ plans to cut output
US President Joe Biden disappointment as cut from Opec and allies including Russia is the largest reduction since 2020
Oil prices steadied on Friday ahead of key US economic data after rising more than 1% in the last session on cuts to Opec+ production targets.
Brent crude futures slipped 11c to $94.31 a barrel by 3.39am GMT. WTI crude futures were down 5c to $88.40 a barrel, after earlier hitting $89.37 per barrel, the highest since September 14.
A stronger dollar added pressure on oil prices amid a chorus of hawkish Federal Reserve speakers signalling further aggressive central bank policy tightening.
Fed officials showed no intention of backing down from the most aggressive rate hike campaign in decades, with Fed governor Lisa Cook, Chicago Fed president Charles Evans and Minneapolis Fed president Neel Kashkari all stressing that the inflation fight was ongoing and they were not prepared to change course.
Markets are keenly watching the US nonfarm payrolls report due later on Friday, with economists forecasting 250,000 jobs to have been added last month, compared with 315,000 in August.
“Oil is leaking lower in Asia, which is not so unusual after a big run-up heading into the weekend, especially against rising US yields and a stronger dollar providing the downdraft and triggering some pre-weekend and pre-nonfarm payroll profit-taking,” Stephen Innes, managing partner at SPI Asset Management said in a note.
However, both benchmarks were headed for weekly gains, fuelled by production cut announcement by Opec+.
The cut from Opec and allies including Russia, together known as Opec+, is the largest reduction since 2020 and comes ahead of a EU embargo on Russian oil. The decision would squeeze supplies in an already tight market, adding to inflation.
“Market sentiment was already bearish in anticipation of a weakening global economy, and this decision should further tighten the market,” analysts at ANZ Research said in a note.
Tightening monetary policy and China’s ongoing Covid-related movement restrictions mean global demand growth is expected to come under pressure, ANZ added.
US President Joe Biden expressed disappointment on Thursday over Opec+’s plans and he and officials said the US was looking at all possible alternatives to keep prices from rising.
Some of those options include releasing more oil from the Strategic Petroleum Reserve or exploring a curb on energy exports by US companies.
Reuters
Asian shares mixed as oil jumps on prospects of output cuts
Oil prices jump ahead of key Opec+ meeting
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