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Oil rises as OPEC+ focus on supply cuts outweighs recession concerns

  • Saudi Arabia and other OPEC producers deny talks of production increases
  • Beijing closes parks and museums as COVID cases rise in China
  • Coming Soon: API Delivery Report

LONDON, Nov. 22 (Reuters) – Oil rose on Tuesday after top exporter Saudi Arabia said OPEC+ is sticking to production restrictions and could take further steps to balance the market, easing global recession concerns and concerns about rising numbers COVID-19 cases in China will be compensated.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman was also quoted Monday by the state news agency SPA as denying a Wall Street Journal report that OPEC was considering increasing production and cutting prices by more than 5%.

Brent crude was up 97 cents, or 1.1%, to $88.42 by 1435 GMT. US West Texas Intermediate (WTI) crude rose $1.19, or 1.5%, to $81.23.

“Crude oil prices are trying to recoup their losses,” said Avatrade analyst Naeem Aslam. “Saudi Arabia’s denial that there was any discussion of an increase in oil supply with OPEC and its allies has bolstered the market today.”

The United Arab Emirates, another major OPEC producer, denied it was in talks to change the latest OPEC+ agreement, while Kuwait said there were no such talks. Algeria said an “unlikely” revision of the OPEC+ deal has not been discussed.

OPEC, Russia and other allies, known as OPEC+, meet on December 4, a day before the start of European and G7 measures in response to Russia’s invasion of Ukraine, which could bolster the market.

On December 5, a European Union ban on imports of Russian crude will take effect, as will a G7 plan that will allow shipping companies to help export Russian oil, but only at enforced low prices.

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“The critical risk to a price cap policy is the potential for Russian retaliation, which would make this an additional bullish shock to the oil market,” Stephen Innes, managing partner at SPI Asset Management, said in a report.

Concerns about oil demand in the face of US Federal Reserve rate hikes and China’s strict COVID lockdown policies limited the upside.

Beijing closed parks, malls and museums on Tuesday and more Chinese cities resumed mass COVID testing. The Chinese capital warned on Monday that it faces the toughest challenge of the pandemic and tightened rules for entering the city.

Later on, the latest weekly snapshots of supply in the United States will take center stage, which show crude inventories are expected to have fallen by 2.2 million barrels. The American Petroleum Institute report comes out at 2130 GMT.

Additional reporting by Laura Sanicola and Isabel Kua Editing by David Goodman, Kirsten Donovan and Jane Merriman

Our Standards: The Thomson Reuters Principles of Trust.

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