Oil rose as traders boosted bets that OPEC and its allies will work to counteract the plunge in prices over the past four weeks.
West Texas Intermediate rallied as much as 4 per cent to trade near US$76 a barrel on Friday after Goldman Sachs Group Inc. analysts said they expect the Organization of Petroleum Exporting Countries to act to support prices when it meets next week. Global benchmark Brent advanced as much as 4.3 per cent to top $80.
Saudi Arabia and Russia — the group’s biggest producers — have already pledged to keep additional output curbs in place until the end of the year, though Russia’s crude exports have risen in recent weeks.
“We believe that OPEC will ensure that Brent oil prices end up in a $80-to-$100 range in 2024 by ensuring a moderate deficit and leveraging its pricing power,” Goldman Sachs analysts including Daan Struyven said in a note.
Still, the U.S. benchmark is on course for a weekly drop of about 2 per cent, its fourth straight weekly retreat. It also recently declined more than 20 per cent from the highs of September.
Supplies have been exceeding expectations in recent weeks, causing prices for real-world barrels to soften steadily. Shipments from Guyana and the North Sea are set to rise next month, while US exports have been surging.
Recent price weakness has been compounded by technical factors. Key market gauges are trading in a bearish contango structure for the first time in months, while the 200-day moving average also was breached in recent days, exacerbating the selling pressure.
Inventory data from the U.S. earlier in the week showed a sharp increase in stockpiles recently, particularly at the key storage hub of Cushing, Oklahoma. Those buildups come as refineries undergo seasonal maintenance, reducing their demand for crude. Overseas shipments have also been leaping as U.S. production rises.
- WTI for December delivery rose 3.9 per cent to $75.75 a barrel at 1:17 p.m. in New York.
- More-active January futures advanced 4 per cent to $75.99 a barrel.
- Brent for January settlement added 4.2 per cent to $80.67 a barrel.
The demand outlook has also been cloudy. Figures from China, the world’s largest importer of crude, show refiners cut daily processing rates in October as apparent oil demand fell from a month earlier. Meanwhile, U.S. unemployment benefits rose to the highest level in almost two years, signalling a slowdown in the world’s biggest crude consumer.