Oil prices rose in the earlier hours of Monday as global energy investors started pricing in an additional output cut from OPEC+ producers at a meeting scheduled for later today.
Brent crude oil, against which Nigerian oil is priced, grew by $2.42, or 2.6% to $95.44 a barrel at 9:30 am Nigerian time. While the U.S West Texas Intermediate crude oil gained $2.05, or 2.4% to settle at $88.92 a barrel.
Markets in the United States will be closed for a public holiday today, Monday 5, September 2022.
Oil rose to a multi-year high in March shortly after Russia invaded Ukraine in February on concerns that the war will worsen the global oil supply in an already tight market. However, Covid-19 restrictions in China, the world’s largest importer of the commodity, and interest rate hikes across the world plunged oil prices below $100 a barrel.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEc+, may cut crude oil output later today to prop up oil prices or maintain the current production level.
“OPEC+ will most likely keep output tight enough to retain the oil price amid demand disruptions that were sparked by the renewed lockdowns in some parts of China,” said Tina Teng, an analyst at CMC Markets.
Russia, the world’s second-largest oil producer and a key OPEC+ member, does not support a production cut at this time, and the group will likely keep its output steady when it meets on Monday, the Wall Street Journal reported on Sunday, citing unidentified people familiar with the matter.
“While we expect the group to keep output unchanged, the rhetoric may be bullish as it looks to arrest the recent fall in prices,” ANZ analysts said in a note.