Oil prices rose over 3% Monday morning in Asian trading following reports specified the Organization of the Petroleum Exporting Countries and their Allies (OPEC+) are likely to consider a production cut of over a million barrels a day in the new trading week.
Brent crude futures rose 3.3% to $87.96 a barrel before settling at $87.22/barrel. US West Texas Intermediate futures were also up over 3% in morning trade to last trade at $81.41/barrel.
If the alliance decides to cut its benefit at its meeting in Vienna on Wednesday, it will be the second straight monthly cut. OPEC+ cut production by 100,000 barrels a day in September.
Also read: How to buy oil futures
softening prices: Oil prices have fallen over the past four months, buoyed by fears of a global recession, after central banks around the world aggressively hiked interest rates to curb inflation. From its peak of over $112 a barrel in May this year, the WTI spot is down over 27% so far.
The price slide has spilled over into some ETF performances. That United States Brent Oil Fund BNO Lost over 6% in the last month while the Vanguard Energy Index Fund ETF VDE lost over 9% over the same period.
If OPEC+ decides to proceed with the cut, it would be against the interests of the biden Government calling for an increase in oil production to curb inflation and limit Russia’s revenue from the commodity.
Expert Take: according to a Reuters Report, NO Analysts issued a note saying that anything below 500,000 barrels/day would be shelved from the market.
Continue reading: OPEC+ to consider production cuts of more than 1m barrels per day at next meeting: report
