Oil fell to a 10-month low on reports of an OPEC+ production increase

  • Saudi Arabia, other OPEC producers eye production increase -WSJ
  • Chinese demand fears and a strong dollar also weighed on prices

NEW YORK, Nov 21 (Reuters) – Crude oil prices fell to their lowest since early January on Monday after the Wall Street Journal reported that Saudi Arabia and other OPEC oil producers were considering raising production by half a million barrels a day.

Brent crude for January delivery was down $4.07, or 4.7%, at $82.93 a barrel by 11:43 am EST (1643 GMT). US West Texas Intermediate (WTI) crude futures for December delivery were down $4.48, or 5.6%, at $75.60 before the contract expired on Monday. The most active January contract was down $4.05, or 5%, at $76.04.

An increase of up to 500,000 barrels per day (bpd) will be discussed at the OPEC+ meeting on December 4, according to The Wall Street Journal.

Reuters could not immediately verify the report.

“It’s hard to believe that they’re going into a market that’s basically trading in contango,” said Bob Yawker, director of energy futures at Mizuho in New York, noting the effect of current oil futures trading at a discount to later-dated contracts. “That’s playing with fire.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, recently lowered production targets and de facto leader Saudi Arabia’s energy minister cited this month.

Weaker Chinese fuel demand and stronger U.S. dollar output at the same time could move the market deeper into contango, encouraging oil to go into storage and pushing prices even lower, Yawkar said.

Expectations of further interest rate hikes buoyed the greenback, making dollar-denominated commodities like crude oil more expensive for investors.

The dollar rose 0.9% to 141.665 yen against the Japanese yen, Oct. 14 on pace for its biggest one-day gain since. read more

“Besides the weak demand outlook due to China’s Covid restrictions, the US dollar’s rebound today is a bearish factor for oil prices,” said CMC Markets analyst Tina Deng.

“With recent economic data from all major countries pointing to a slowdown, particularly in the UK and the eurozone, risk sentiment is weakening,” he said, adding that the US Federal Reserve’s hawkish comments last week fueled concerns about the US economy. Overview.

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Front-month Brent crude futures contracted sharply last week, while WTI flipped in the cantango, reflecting easing supply concerns.

Additional reporting by Jason Neely, David Goodman and David Gregorio Editing by Noah Browning, Florence Tan and Emily Cho

Our Standards: Thomson Reuters Trust Principles.

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