Oil prices rose more than $2 per barrel on Wednesday, owing to signs of tighter supply, a weaker US dollar, and optimism about a Chinese demand recovery.
Brent crude traded at $85.43 per barrel yesterday, up $2.40 or 2.8 percent, while West Texas Intermediate (WTI) crude traded at $80.55 per barrel, up $2.35 or 3.01 percent.
The positive market was fueled by news that the Organization of Petroleum Exporting Countries and Allies (OPEC+) will meet virtually on December 4th.
According to Reuters, policy changes are unlikely as the group assesses the market impact of the looming Russian oil-price cap.
“OPEC+ would rather sit on the sidelines at this time and see what happens on Monday,” an unnamed source told Reuters.
OPEC+ was supposed to meet in Vienna, Austria, for the second time since the pandemic.
OPEC also canceled a meeting of its ministers scheduled for Saturday, and OPEC+ canceled a meeting of oil market experts, the Joint Technical Committee, scheduled for Friday.
Support came from expectations of tighter crude supply, as US crude oil stocks fell by nearly 13 million barrels in the week ended November 25, the most since 2019.
China’s COVID-19 lockdowns weighed on demand and prices, but positively. Yesterday, the world’s largest oil importer reported fewer COVID-19 infections than on Tuesday, while the market speculated that weekend protests might lead to a relaxation of travel restrictions.
A drop in the value of the US dollar was also beneficial to prices. A weaker dollar lowers the cost of dollar-denominated oil contracts for holders of other currencies, increasing demand.
The pending European Union (EU) deal on Russian oil price caps is also in sight, with the International Energy Agency (IEA) estimating that Russian crude production will be reduced by 2 million barrels per day by the end of the first quarter of next year.
