(MENAFN- Trend News Agency) Oil prices rose as much as 2% on Monday after OPEC+ nations held
their output targets steady ahead of a European Union ban and a
price cap kicking in on Russian crude, trend reports with reference to reuters .
At the same time, in a positive sign for fuel demand, more
Chinese cities eased COVID-19 curbs over the weekend, though a
patchwork easing in policies sowed confusion across the country on
Monday.
Brent crude futures were last up 72 cents, or 0.8%, to $86.29 a
barrel at 0430 GMT, while U.S. West Texas Intermediate (WTI) crude
futures gained 70 cents, or 0.9%, to $80.68 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and
allies including Russia, together called OPEC+, agreed on Sunday to
stick to their October plan to cut output by 2 million barrels per
day (bpd) from November through 2023.
Analysts said the OPEC+ decision was expected as major producers
wait to see the impact of the EU import ban and Group of Seven (G7)
$60-a-barrel price cap on seaborne Russian oil, with Russia
threatening to cut supply to any country adhering to the cap.
'While OPEC remained steady on output over the weekend, I expect
they will continue to balance the market,' said Baden Moore, head
of commodity research at National Australia Bank.
'(A) Roll-off of the SPR releases, and implementation of the EU
sanctions and price cap act to tighten the market, although we'd
expect the market has already positioned for this outlook,' he
said, referring to the U.S. strategic petroleum reserve.
The European Union will need to replace Russian crude with oil
from the Middle East, West Africa and the United States, which
should put a floor under oil prices at least in the near term, Wood
Mackenzie vice president Ann-Louise Hittle said in a note.
'Prices are currently weighed down by expectations of slow
demand growth, despite the EU oil import ban on Russian crude and
the G7 price cap. The adjustment to the EU ban and price cap is
likely to support prices temporarily,' Hittle said.
A key factor that has weighed on demand is China's zero-COVID
policy, but that appears to be easing now after protests were
followed by several cities, including Beijing and Shanghai,
relaxing restrictions to varying degrees.
Hittle added that the EU's looming embargo on Russian oil
products, in addition to crude oil, from Feb. 5 should support
crude demand in the first quarter of 2023, as the market is short
of diesel and heating oil.