Oil closes higher, with new speculation about cuts by OPEC+

Oil futures ended this Monday (28) higher, after operating most of the trading session in the red, reacting to renewed speculation about a possible new production cut by the Organization of Petroleum Exporting Countries and allies (OPEC + ), which meets next week.

The barrel of WTI oil for January closed up 1.26% (US$0.96), at US$77.24 on the New York Mercantile Exchange (Nymex), while that of Brent for February advanced 0.21% ( $0.18), to $83.89 on the Intercontinental Exchange (ICE).

The protests in China this weekend against the covid-zero policy kept oil contracts in negative territory most of the time today. The rapid spread of the disease in the Asian giant, associated with political turmoil, increased investors’ fears of a greater imbalance between supply and demand, given the growing risks to the world economy.

According to Rystad Energy, despite the lockdowns, oil demand in China is still resilient. “So far, the latest round of lockdowns appears to mimic the previous ones, with national road traffic only marginally affected, while selected provinces undergo comparatively severe lockdowns to try to quell covid outbreaks,’ he says.

“However, street protests against the blockades in various parts of the country are new and could become a source of new disturbances in the coming days,” he adds.

Also this weekend, the American government released a license for Chevron to explore oil in Venezuela. The decision, however, should have a limited impact on supply in the short term.

The market is still waiting for a definition on a price ceiling, after negotiations between members of the G7 and the European Union did not reach an agreement last week.