Oil prices climb after OPEC+ keeps output cut targets, China eases COVID curbs

  • Brent gained 0.8% at 0430 GMT, WTI up 0.9%
  • OPEC+ sticks to plans to cut production by 2 mln bpd
  • More Chinese cities ease COVID-19 restrictions

MELBOURNE, Dec 5 (Reuters) – Oil prices rose as much as 2% on Monday after OPEC+ nations kept their output targets steady ahead of a European Union ban and price cap affecting Russian crude.

Meanwhile, in a positive sign for fuel demand, more Chinese cities eased COVID-19 curbs over the weekend, although a patchwork easing of policies caused confusion across the country on Monday.

Brent crude futures rose 72 cents, or 0.8%, to $86.29 a barrel at 0430 GMT, while US West Texas Intermediate (WTI) crude futures gained 70 cents, or 0.9%, to $80.68 a barrel.

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The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+, agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day (bpd ) from November to 2023.

Analysts said the OPEC+ decision was expected as major producers awaited the impact of the EU import ban and the Group of Seven (G7) $60-a-barrel price cap on Russian offshore oil, with Russia threatening on cutting supply to any country that complies. the cap.

“Although OPEC remained steady on output over the weekend, I expect they will continue to balance the market,” said Baden Moore, head of commodities research at National Australia Bank.

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“(A) Rolling out of SPR issues, and the implementation of the EU Sanctions and Price Caps Act to tighten the market, although we would expect that the market is already positioned for this view,” he said , referring to the strategic strategy of the United States. petroleum reserve.

The European Union will have to replace Russian crude with oil from the Middle East, West Africa and the United States, which should at least put a floor on oil prices soon, Wood Mackenzie vice-president Ann-Louise Hittle said in note. .

“Prices are currently weighed down by expectations of slow demand growth, despite the EU oil import ban on Russian crude and the G7 price cap. The adjustment of the EU ban and price cap is likely to temporarily support prices,” said Hittle.

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A key factor weighing on demand is China’s zero-COVID policy, but it now appears to be easing after several protest cities, including Beijing and Shanghai, eased restrictions to varying degrees.

Hittle also said that the EU embargo on Russian oil products, as well as crude oil, from February 5 onwards should support crude oil in the first quarter of 2023, as the market is short of diesel and heating oil.

Reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Edited by Cynthia Osterman and Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.


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