Oil takes sharp weekly drop ahead of OPEC meeting
The cartel could agree to cut production to better align prices with fundamentals: File Image/Pixabay
Although oil made minimal gains on Friday amid concerns over tighter monetary policies globally and more Covid lockdowns in ChinaWest Texas Intermediate dropped
6.7% for the week on a wave of bearish sentiment and fear that has dominated trading for the past few sessions.
WTI for October delivery rose 26 cents settle at $86.87 per barrel, while Brent for November settlement rose 66 cents at $93.02
Investors are closely watching events in China, where the latest lockdowns in the city of Chengdu hit manufacturers such as VOLVO; previous shutdowns caused Chinese factory activity to contract in August for the first time in three months.
The question is how does the G-7 control this?
Richard Watts, Managing Director, Maritime HR
Although oil prices fluctuated wildly in the second half of this year, overall the commodity fell by more than 20 percent in the three months to August, wiping out the gains from Russiathe invasion of Ukraine; and this makes oil vulnerable to Saudi Arabiathe previous remark that the Organization of Petroleum Exporting Countries (OPEC) will reduce supplies to better align prices with extremely tight fundamentals.
The cartel and its allies are to meet on Monday to plan the exit policy.
Also on Friday, Group of Seven Finance ministers gathered to officially back a plan to introduce the much-discussed price cap on international purchases of Russian oil, to limit revenue to Moscow but let the crude sink to avoid price spikes.
The G-7 said: “We confirm our common political intention to finalize and implement a comprehensive ban on services that enable the maritime transport of crude oil and petroleum products of Russian origin globally; the provision of these services would only be permitted if petroleum and petroleum products are purchased at or below a price determined by the broad coalition of countries joining and implementing the price cap.”
Ministers aim to implement the cap in accordance with the timetable for European Union sanctions against Russian oil are expected to come into effect on December 5, but Richard Wattsthe general manager of Marine HRechoed the sentiments of critics saying, “The question is, how does the G-7 control this?
“Pretty big steps are going to have to be taken to make sure that companies don’t find ways around price caps.”
As for another major influence on oil prices of late (and seen as one of the main reasons prices rebounded on Friday from earlier severe losses), the WE The State Department said Friday that IranThe most recent response to the nuclear deal proposals was “not constructive”, suggesting the talks could even last beyond the already extended September deadline if not scrapped altogether.