Oil bounces off a 10-month low on OPEC not considering increasing oil output

Summary:

• Oil prices rose from a 10-month low on Monday.
• G7 countries are planning to cap the price of Russian crude.

OPEC are not planning an increase in oil output

After Saudi Arabia "categorically" dismissed a report that Opec was considering an increase in output to help offset the loss of Russian supply, oil prices rose from a 10-month low on Monday.

The international standard for crude oil, Brent, initially fell 6% to $82.79 per barrel before reducing its loss to 2% and trading at $85.95. The US benchmark, West Texas Intermediate, fell by a similar amount but later pared its losses to trade down about 2% at $78.50. Each benchmark's price fell to its lowest intraday level since January as a result. This was before Russia's invasion of Ukraine upended the world's crude markets and caused prices to skyrocket.

After the Wall Street Journal revealed that Saudi Arabia and other Opec producers were debating increasing output by up to 500,000 barrels per day at the group's meeting in Vienna on December 4, the market became volatile. The cartel's de facto leader, Saudi Arabia, later claimed that it was "well known" that no decisions were discussed before meetings.

Additionally, it would occur the day before the EU is scheduled to impose an embargo on oil exports from Russia and the G7 countries are planning to cap the price of Russian crude. The US dollar index, which compares the US dollar to six other currencies, increased 1% on Monday, continuing the comeback from the previous week, even though the US dollar is still down roughly 3% for the month of November.

The lower-than-expected US inflation number for October and expectations that China might be about to loosen its zero-Covid stance had fueled speculation that the dollar may have peaked in late September. This week, however, investors had less confidence in the latter after the provincial capitals of Shijiazhuang and Guangzhou implemented stricter Covid controls to reduce cases.

Sources: ft.com