Crude oil futures are soaring to kick off the trading week, buoyed by reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, are planning a significant cut in production. With oil prices plummeting, the cartel is looking to support crude.
November West Texas Intermediate (WTI) crude oil futures advanced $3.50, or 4.40%, to $82.99 per barrel at 12:55 GMT on Monday on the New York Mercantile Exchange. US crude is looking to move on from an abysmal third-quarter decline of about 24%. Year-to-date, US crude is up just 10%.
Brent, the international benchmark for oil prices, is also looking to test $90 a barrel again. December Brent crude futures surged $3.36, or 3.95%, to $88.50 a barrel on London’s ICE Futures exchange. Brent has also slumped and erased its post-invasion gains.
According to Bloomberg and The Wall Street Journal, the 23-member cartel is considering a reduction in output by as much as 1.5 million barrels per day, although sources say officials agree to one million barrels per day.
OPEC will be hosting an in-person meeting in Vienna on Wednesday, the first of its kind since March 2020.
The chief objective for the group is to revive prices as a strengthening US dollar and growing global recession fears are expected to weigh on international demand.
“The strong dollar and weak demand in China and Europe pose significant headwinds resulting in increased backwardation in term spreads since mid-August and still signaling pessimism around the global economic outlook. A tepid response in futures to a production cut would chime with the negative message that lower U.S. inflation breakevens and industrial metal prices are sending,” Stephen Innes, managing partner at SPI Asset Management, told MarketWatch.
In other energy commodities, November natural gas futures slumped $0.273, or 4.03%, to $6.493 per million British thermal units (Btu). November gasoline futures rose $0.102, or 4.3%, to $2.4716 a gallon. November heating oil futures jumped $0.1092, or 3.5%, to $3.3342 per gallon.