By Adedapo Adesanya
Oil prices settled higher by over $2 per barrel on Wednesday on signs of tighter supply, a weaker US Dollar and optimism over a Chinese demand recovery.
Brent crude was sold for $85.43 per barrel yesterday after it grew by $2.40 or 2.8 per cent, while the US West Texas Intermediate (WTI) crude went for $80.55 per barrel after gaining $2.35 or 3.01 per cent.
The positive market was spurred by news that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will hold its December 4 meeting virtually.
This signals little likelihood of a policy change, Reuters reported on Wednesday, as the group assesses the impact of the looming Russian oil-price cap on the market.
“OPEC+ would rather sit on the bench at this time and assess the outcome of what happens on Monday,” an unnamed source told the news agency.
OPEC+ had been expected to convene in Vienna, Austria, for only the second time since the pandemic.
OPEC also made a meeting of its own ministers planned for Saturday a virtual gathering, and OPEC+ cancelled a meeting of oil market experts, the Joint Technical Committee, that had been scheduled for Friday.
Support followed expectations of tighter crude supply as US crude oil stocks plunged by nearly 13 million barrels, the most since 2019, in the week ended November 25, according to the Energy Information Administration (EIA).
China’s COVID-19 lockdowns also weighed on demand and prices, however, in the positive direction. The world’s largest oil importer reported fewer COVID-19 infections yesterday than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.
A fall in the US Dollar was also bullish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies and boosts demand.
The pending European Union (EU) deal over the price cap on Russian oil is also in sight, with the International Energy Agency (IEA) saying Russian crude production will likely be curtailed by some 2 million barrels of oil per day by the end of the first quarter next year.
Modupe Gbadeyanka