Oil Prices Show Modest Rebound as OPEC+ Holds Firm on Output Cuts
Oil prices experienced a modest uptick during early trading, partially recovering from significant losses in the previous session. This rebound followed a decision by an OPEC+ panel to maintain oil output cuts, aiming to keep the supply tight amid concerns about a potential global economic slowdown.
Brent crude oil futures saw a gain of 11 cents, reaching $85.92 per barrel, while U.S. West Texas Intermediate crude (WTI) increased by 7 cents to reach $84.29 at 0040 GMT.
In the preceding day, oil prices had dropped by more than $5 due to a more pessimistic macroeconomic outlook and concerns about declining fuel demand. This decline followed a meeting of the OPEC+ panel, which consists of the Organization of the Petroleum Exporting Countries and allies led by Russia.
The OPEC+ ministerial panel opted to maintain the existing oil output policy. Saudi Arabia confirmed its commitment to a voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia pledged to maintain a 300,000 bpd voluntary export curb until the end of December.
National Australia Bank analysts noted, “We continue to see the market in deficit through the fourth quarter, and the softer prices reduce the probability OPEC will ease supply constraints.”
On a less optimistic note, a survey indicated that the euro zone economy likely contracted in the previous quarter, with demand experiencing its sharpest decline in almost three years in September due to consumer spending restraint amid rising borrowing costs and prices.
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Meanwhile, the U.S. services sector slowed down in September, with new orders reaching a nine-month low. However, this deceleration remained in line with expectations for solid economic growth in the third quarter.
JP Morgan expressed the view that “Fuel prices may be closer to consumers’ pain threshold than inflation-adjusted prices might suggest,” and they expected oil prices to decrease to $86 per barrel by year-end from the peak of $97 per barrel observed in September.
