Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Oil Bulls Ride OPEC+ Wave to Push Brent Near $100 a Barrel

Commodities Oct 07, 2022 02:58PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
-1.68%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-1.08%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan

Investing.com -- What goes down, must also come up -- in oil's case, at least.

Crude prices jumped 4% Friday and double-digits on the week as oil bulls starved of gains from a four-month long selloff piled back into the market on this week’s production cut announced by OPEC.

With bringing Brent back to $100 per barrel appearing to be the first item on their clipboard, bulls pushed long and hard and nearly got there. The world benchmark for crude broke above $98 the first time since Aug. 31, rising 12% on the week.

West Texas Intermediate, the U.S. crude gauge, had an even more eye-popping gain of 17% on the week as it crossed $90 the first time since July 24.

“OPEC+ has done whatever it takes and is now awaiting to see what the reaction will be from world leaders,” said Ed Moya, analyst at online trading platform OANDA.

The “reaction” from the U.S. government, at least, could be to limit the amount of fuel that can be exported out of the United States — in a bid to stop gasoline prices from retracing their mid-June record highs of $5 a gallon. As of Friday, the gasoline price at U.S. pumps averaged around $3.80 per gallon.

OPEC+, which groups the 13-member Saudi-led Organization of the Petroleum Exporting Countries with 10 oil exporters steered by Russia, announced on Wednesday what was billed as a “deep” production cut of 2 million barrels per day.

But that figure was well below the 3.5-million-barrel daily shortfall in the group’s previously announced output target.

What’s more, there was no breakdown on where the reductions would come from — i.e. which countries would be cutting and how they would be doing so. The alliance had banked on the market to just swallow what it said and send prices back near the highs of the year. Oil bulls, predictably, have done just that.

WTI settled the day up $4.19, or 4.7%, at $92.84 per barrel. For the week, the U. S. benchmark was up 17%. Prior to this week, WTI had fallen 12.5% in September and 24% in the third quarter.

Brent settled Friday’s session up $3.50, or 3.7%, at $97.92. For the week, Brent rose 11%, after an 11% drop in September and third-quarter loss of 22%.

Phil Flynn, an energy analyst at the Price Futures Group and a well-known oil bull, however, said there was justification for the market rebound beyond the OPEC+ decision. “Crude oil supplies are 3% below the five-year average,” Flynn added.

If there was anything holding the market back from its true bullish potential, it had to be the much-awaited U.S. jobs data for September released by the Labor Department on Friday. 

U.S. employers added 263,000 jobs in September, slightly above economists' expectations, while the jobless rate dipped to 3.5% from August's 3.7% in a continued challenge to the Federal Reserve's fight against inflation, the data showed. 

The Dollar Index rallied for a third straight day on Friday as those long the greenback tried to reprise the 20-year highs from a week ago.

A strong dollar is anathema to dollar-denominated commodities, including crude, as it raises the transaction/acquisition costs for commodity traders using the euro and other currencies.

Moya, however, said the momentum in oil, for now, might overwhelm any upward trajectory in the dollar.

“A strong dollar is eating away at some of crude’s weekly gains, but that won’t have a lasting impact,” he said.

Oil Bulls Ride OPEC+ Wave to Push Brent Near $100 a Barrel
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (8)
Andrew Ulferts
Andrew Ulferts Oct 09, 2022 5:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This all happened right before earnings reports. This could be the most bullish couple of weeks since 2017- so far. The best is yet to come. Let’s see the shorts get squeezed as bulls get some hard earned revenge. Watch what happens in a year or two when the Dollar finally gets crushed. It always does eventually. Oil companies and drillers are the place to be for at least a couple of years.
Ac Tektrader
Ac Tektrader Oct 07, 2022 4:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so many cons spreading spam...
Richie Berg
Richie Berg Oct 07, 2022 3:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
OPEC+ played Biden like fiddle. Biden will be force to drain the SPR to zero or inflation to spike again.
Reinis Sudmalis
Reinis Sudmalis Oct 07, 2022 2:59PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
deal between automakets makes billions of penalties, deals between opec makes trillions of profit!
Warm Camp
Warm Camp Oct 07, 2022 2:59PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sovereign countries have full right to make trade agreements.
Mike Nordic
MikeNordic Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
But wait, the FED and Powell say they are bringing it down with rate hikes... hahhaha Is there still anyone believing rate hikes will bring energy down?
Show previous replies (2)
Warm Camp
Warm Camp Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Maks Mars  Your scenario is hardly realistic, more like a dream.
Paul Trader
Paul Trader Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Warm Camp so fed is powerless.
Warm Camp
Warm Camp Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Paul Trader  I don’t argue with this. Yes, the Fed’s ability to suppress inflation is severely constrained at the moment.
Zhehui Jin
Zhehui Jin Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mr. Powell admitted that he cannot fully control the energy price as Fed could not influence supply. However, Fed can indirectly reduce demand, but the issue is that there is structual imbalance in oil supply and demand, which is a fundamental one
Warm Camp
Warm Camp Oct 07, 2022 2:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Zhehui Jin  Exactly, structural imbalance.
Stephen Fa
Stephen Fa Oct 07, 2022 1:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Loving my $USO trade. Still have half position in more profit.
Casador Del Oso
Casador Del Oso Oct 07, 2022 1:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great trade!
Warm Camp
Warm Camp Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Translating oil-dollar for stock investors: stronger oil price, denominated in stronger dollar, means bonanza for stocks of US companies producing oil abroad, because their costs are denominated largely in local currencies, getting weaker vs the dollar.
Show previous replies (3)
Warm Camp
Warm Camp Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  Maybe, you better take care of removing spam from your forum, instead of labeling perfectly investment-related message as being not on topic.
Bill Powers
Bill Powers Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
don't mind barani. he's a grump
Barani Krishnan
Barani Krishnan Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Warm Camp  We have been targeted by some very sticky bots that our techs have been working to fix. It's been a tough fight, I assure you. I will do whatever is necessary as a moderator/participant on this forum to engage with/direct readers (bots are being handled by the techs)
Barani Krishnan
Barani Krishnan Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bill Powers  I know, chief. But grumps need to be directed too. LOL
Zhehui Jin
Zhehui Jin Oct 07, 2022 1:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
High oil price with a strong dollar is particularly bullish to oil companies in other countries, such as Canada. Also the depleted SPR needs heavy sour crude which is the one exactly produced in Alberta
Alan Rice
Alan Rice Oct 07, 2022 1:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Still CHEAP.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email