Initial trading on Friday saw oil prices relatively unchanged, but they were still on track for their first weekly rise in five weeks thanks to a combination of a lower U.S. dollar and speculation that OPEC+ may agree to cut petroleum output at its meeting on October 5.
Futures contracts for November delivery of U.S. West Texas Intermediate (WTI) oil increased by 6 cents, to $81.29 a barrel at 00:54 GMT, after plunging by 92 cents the previous session.
After dropping 83 cents the previous day, November futures edged up 2 cents to $88.51 a barrel on Friday’s expiration. In December, the more popular contract rose 1 cent to $87.19.
After hitting nine-month lows earlier in the week, Brent and WTI are expected to increase by approximately 3 percent for the week, marking their first weekly uptick since August.
Brent is predicted to fall by 8% for the month of September, marking the fourth consecutive monthly decline. The 23% drop in Brent prices during the third quarter was the first quarterly decline for the commodity since the fourth quarter of 2021.
This would be the fourth consecutive monthly reduction for WTI, and the 23% quarterly dip would be the first quarterly plunge since the quarter ending in March 2020, when COVID-19 smashed demand.
With supplies expected to tighten as a result of the European Union banning Russian oil imports on December 5, analysts said the market looked to have found a floor. It is unclear, however, by how much demand will fall as global GDP slows in response to aggressive interest rate rises.
According to National Australia Bank (OTC:) commodities analyst Baden Moore, “fundamentally, I still think prices are going to trend higher from here on tightening of Russian sanctions and with low global oil stocks, with the SPR (U.S. Strategic Petroleum Reserve) supplies tapering out.”
He stated his confidence that OPEC will be able to “control supply to counter threats to demand.”
Ahead of their meeting on Wednesday, top members of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, have reportedly began negotiating an output reduction, according to three sources cited by Reuters.
Earlier this week, a person familiar with Russian thinking suggested that Russia might propose a decrease of up to 1 million barrels per day.
With the currency down from earlier this week’s highs, oil prices were bolstered. Oil priced in dollars becomes more attractive to purchasers holding currencies other than the dollar when the value of the currency declines.