CNA – Oil prices were on track for their first weekly gain yesterday, underpinned by a weaker dollar and the possibility that Organization of the Petroleum Exporting Countries Plus (OPEC+) will agree to cut crude output when it meets on October 5.
Brent crude futures for November, which expired yesterday, rose by 95 cents, or 1.07 per cent, to USD89.44 a barrel by 0948 GMT. The more active December contract was up 81 cents at USD87.99.
United States (US) West Texas Intermediate (WTI) crude futures rose 72 cents, or 0.89 per cent, to USD81.95.
Brent and WTI contracts rose by more than USD1 earlier in the session and are poised for a weekly gain of about four per cent. It would be the first weekly rise since August and follow nine-month lows hit earlier in the week. Oil prices were shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity.
Analysts also expect buying to lift as Russia prepares to annex four Ukrainian regions to Russia yesterday in a move that could force the US to strengthen sanctions against Russia.
The market has received fresh support from the prospect of the OPEC and its allies cutting production quotas at its October 5 meeting. Analysts expect a production cut because demand fears linked to a possible global economic slowdown and rising interest rates have weighed on crude prices.
Brent and WTI prices are likely to finish the third quarter with a chunky 23-per-cent decline.
“The producer group has lost control over the oil market in recent weeks and will want to reassert its influence,” said Stephen Brennock of oil broker PVM, adding that OPEC+ leadership will want to safeguard a price floor of USD90 a barrel.
“Expect oil prices to receive a supportive kick up the backside next week,” Brennock said.
