OPEC+ grapples with mixed rising oil prices

A grade of crude oil, Brent, rose above $79 a barrel on Friday, supported by tight supplies due to supply curbs ahead of the meeting of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) on Monday.

The global crude benchmark appreciated by 1.07 per cent or 85 cents yesterday to sell at $79.15 per barrel, while the US grade, West Texas Intermediate (WTI), moved up by 0.93 per cent or 70 cents to trade at $75.73 per barrel.

The group is slowly unwinding record output cuts made last year, although sources say it is considering doing more to boost production.

Ahead of the OPEC+ meeting next Monday, speculations have been rife regarding the group’s intentions to bring more crude into the market as the first US inventory stock build since late July and news of laggards, Russia and Kazakhstan ramping up supply have provided some downside for prices.

At the same time, exorbitantly high gas prices driving gas-to-oil switching in Asia and the US dollar weakening are largely offsetting those factors.

In July, the group agreed to boost output by 400,000 barrels per day a month to phase out 5.8 million barrels per day in cuts.

Reports cited four OPEC+ sources saying that the producers were considering adding more than that deal envisaged, but none gave details on how much more, or when supply would increase.

Another OPEC+ source suggested an increase of 800,000 barrels per day for one month was possible, with zero the next month.

It is not yet clear what the market will do yet but discussions among members will be reached at the virtual meeting on October 4.

Brent oil had risen to a three-year high above $80 a barrel, boosted by unplanned outages in the United States and a strong recovery in global economic activity and energy demand as many countries emerge from the pandemic but rising oil, gas, coal and power prices are feeding inflationary pressures worldwide and slowing the recovery.

US energy firms this week added oil and natural gas rigs for a fourth week in a row as more storm-hit offshore units resumed service in the Gulf of Mexico. Rigs rose by 7 to 528 in the week to October 1, its highest since April 2020, according to data.

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