Oil prices on Monday fell to their lowest since early January after the Wall Street Journal reported that Saudi Arabia and other OPEC oil producers are considering a half-million-barrel daily output increase.
Brent Crude Futures Oil for January fell $4.07, or 4.7%, to $82.93 a barrel by 11:43 a.m. EST (1643 GMT). US West Texas Intermediate (WTI) crude futures for December were down $4.48, or 5.6%, at $75.60 ahead of the contract’s expiration later on Monday. The more active January contract was down $4.05, or 5%, at $76.04.
The Wall Street Journal reported that an increase of up to 500,000 barrels per day (bpd) would be discussed at the OPEC+ meeting on 4 December.
Reuters was not immediately able to verify the report.
“It’s hard to believe they’re going into a market that’s basically trading in contango,” said Bob Yavger, director of energy futures at Mizuho in New York. Oil futures currently at a discount to later-dated contracts. Mentioned the effect of business. “He’s playing with fire.”
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, recently cut production targets, and de facto leader Saudi Arabia’s energy minister was quoted this month as saying the group Will be alert.
Yawger said that releasing more oil at the same time due to weaker Chinese fuel demand and the strength of the US dollar could push the market deeper into contango, encouraging more oil to go into storage and pushing prices lower. can be done.
Expectations of a further rise in interest rates have buoyed the greenback, making dollar-denominated commodities like crude oil more expensive for investors.
The dollar rose 0.9% to 141.665 yen against the Japanese yen, on pace for its biggest one-day gain since Oct. 14.
“Apart from the weak demand outlook due to China’s Covid restrictions, the rebound in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng.
“Risk sentiment turns fragile as recent economic data from all major countries point to a recessionary outlook, especially in the UK and the euro area,” he said, adding that aggressive remarks from the US Federal Reserve last week also raised concerns about the US Expressed concern over the economy. the vision.