Crude oil price up nearly 6% ahead of OPEC+ meet on Dec 4
People in the know have indicated that though a policy change is unlikely, a further cut cannot be ruled out.
Crude oil prices after declining almost by seven percent in the month of November have started December on a positive note. Crude prices n the first week of December prices are up nearly six percent and fluctuating ahead of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, meeting on December 4.
People in the know have indicated that though a policy change is unlikely, a further cut cannot be ruled out.
As of now, two million barrels per day is the agreed output cut but November saw only 1.1 million barrels being curbed.
The second important thing is the European Union deadline which ends on December 5 where as of now the price cap has been put at $60 per barrel. Russian oil is trading at $66 per barrel and the European Union has told its 27 members to unanimously approve that.
Apart from that, it is proposed that once the market opens up, EU will ensure that the cap price is 5 percent below the market prices.
Crude price also gained support from the dollar weakness prompted by the Euro Zone factory data and the Federal Reserve Chair saying the pace of U.S. interest rate hikes could be scaled back. A weaker dollar makes oil cheaper for other currency holders and supports risk assets.
The support also comes in from China as imports can start picking up from the month of January. December shipments and volumes have been signed and they are nearly 40 percent lower than what they did in December last year. Thus there is room to grow.
There also is a report from Credit Suisse which says that they are anticipating the crude oil prices to gain in the next quarter.
Text inputs from Reuters
First Published: Dec 2, 2022 12:55 PM IST
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