Oil futures closed sharply higher on Monday (3) in a session marked by indications that the Organization of the Petroleum Exporting Countries and allies (OPEC+) should make production cuts at its meeting this week.
A number of media outlets reported that the group plans on Wednesday (5th) to reduce its production quota for November by more than 1 million barrels a day, seeking to boost commodity prices.
If implemented, the cut would be the biggest since the beginning of the pandemic.
WTI crude for November closed up 4.95% ($4.14) at $83.63 a barrel on the New York Mercantile Exchange (Nymex), and Brent for December rose 4.19% ( US$3.72), at US$88.86 a barrel, on the Intercontinental Exchange (ICE).
In Goldman Sachs’ view, the OPEC+ cut would come amid one of the tightest oil markets in recorded history, and ahead of a potential decline in Russian exports later this year.
For the bank, such a decision can be justified by the recent decline in prices, down 40% since the peak of June, with concerns about global growth.
The collapse in investor participation, boosting liquidity and lower prices, is also a strong catalyst for such a cut, he says.
The move would reinforce the view of rising oil prices, points out Goldman Sachs, which sees the possibility of a cut limiting the downsides to the price of the commodity caused by a potential lower economic growth.
For Edward Moua, an analyst at Oanda, despite everything that is happening with the war in Ukraine, OPEC+ has never been stronger and will do whatever it takes to ensure that prices are supported.
On the other hand, both American and European leaders will not be satisfied with this action, he recalls.
Meanwhile, according to Bloomberg, the European Union (EU) hopes to reach a preliminary agreement on a new package of sanctions against Russia, for the recent escalation of the war in Ukraine and the illegal annexation of four occupied territories in the country, it said today. Poland’s ambassador to the EU, Andrzej Sados.
According to the ambassador, the agreement will likely include political support for imposing a ceiling on the price of Russian oil.
Source: CNN Brasil
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