Oil dives, hits 10-month low on reports of OPEC+ output boost

NEW YORK, Nov 21 (Reuters) – Oil costs plunged on Monday to their lowest since early January, after the Wall Road Journal reported that Saudi Arabia and different OPEC oil producers are contemplating a half-million barrel each day output enhance.

Brent crude futures for January tumbled $4.07, or 4.7%, to $82.93 a barrel by 11:43 a.m. EST (1643 GMT). U.S. West Texas Intermediate (WTI) crude futures for December had been down $4.48, or 5.6%, at $75.60 forward of the contract’s expiry in a while Monday. The extra energetic January contract was down $4.05, or 5%, at $76.04.

A rise of as much as 500,000 barrels per day (bpd) might be mentioned on the OPEC+ assembly on Dec. 4, The Wall Road Journal reported.

Reuters was not instantly in a position to confirm the report.

“It is laborious to imagine they are going right into a market that’s principally buying and selling in contango,” stated Bob Yawger, director of vitality futures at Mizuho in New York, referring the impact of present oil futures buying and selling at a reduction to later dated contracts. “That is taking part in with fireplace.”

The Group of the Petroleum Exporting Nations (OPEC) and its allies, collectively referred to as OPEC+, not too long ago lower manufacturing targets and de facto chief Saudi Arabia’s vitality minister was quoted this month as saying the group will stay cautious.

Releasing extra oil concurrently weak Chinese language gasoline demand and U.S. greenback power might transfer the market deeper into contango, encouraging extra oil to enter storage and pushing costs nonetheless decrease, Yawger stated.

Expectations of additional will increase to rates of interest have buoyed the dollar, making dollar-denominated commodities like crude dearer for buyers.

The greenback rose 0.9% towards the Japanese yen to 141.665 yen, on tempo for its largest one-day acquire since Oct. 14. learn extra

“Other than the weakened demand outlook because of China’s COVID curbs, a rebound within the U.S. greenback at present can be a bearish issue for oil costs,” stated CMC Markets analyst Tina Teng.

“Threat sentiment turns into fragile as all of the latest main international locations’ financial information level to a recessionary situation, particularly within the UK and euro zone,” she stated, including that hawkish feedback from the U.S. Federal Reserve final week additionally sparked considerations over the U.S. financial outlook.

New COVID case numbers in China remained near April peaks because the nation battles outbreaks nationwide.

The front-month Brent crude futures unfold narrowed sharply final week whereas WTI flipped into contango, reflecting dwindling provide considerations.

Extra reporting by Noah Browning, Florence Tan and Emily Chow
Modifying by Jason Neely, David Goodman and David Gregorio

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