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Oil rises to 3-week highs as OPEC+ agrees to deep cuts, U.S. stockpiles fall

Commodities Oct 05, 2022 08:46PM ET
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© Reuters. FILE PHOTO: Pump jacks operate at sunset in Midland, Texas, U.S., February 11, 2019. Picture taken February 11, 2019. REUTERS/Nick Oxford
 
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By Stephanie Kelly

NEW YORK (Reuters) -Oil prices rose on Wednesday to three-week highs, as OPEC+ agreed to its deepest cuts to production since the 2020 COVID pandemic, despite a tight market and opposition to cuts from the United States and others.

Prices also rose on U.S. government data that showed crude and fuel inventories fell last week. [EIA/S]

Brent crude rose $1.57, or 1.7%, to settle at $93.37 a barrel. Brent reached a session high of $93.96 per barrel, its highest since Sept. 15.

U.S. West Texas Intermediate (WTI) crude rose $1.24, or 1.4%, to settle at $87.76 a barrel. It reached $88.42 per barrel during the session, the highest since Sept. 15.

Both Brent and WTI rose sharply in the last two days.

The 2 million-barrel-per-day (bpd) cut from OPEC+ could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising U.S. interest rates and a stronger dollar.

Oil had been rising this week in anticipation of the cuts, said Fiona Cincotta, senior financial markets analyst at City Index.

"The real impact of a large cut would be smaller, given that some of the members are failing to reach their output quotas," Cincotta added.

In August, OPEC+ missed its production target by 3.58 million bpd as several countries were already pumping well below their existing quotas.

"We believe new output targets will mostly be shouldered by core Middle East countries, led by Saudi Arabia, the UAE and Kuwait," said Rystad Energy's analyst Jorge Leon.

Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia may cut oil production in order to offset negative effects from price caps imposed by the West over Moscow's actions in Ukraine.

The United States was pressing OPEC+ producers to avoid making deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in U.S. gasoline prices ahead of midterm congressional elections on Nov. 8.

Biden has been grappling with higher gasoline prices all year, which have eased after a spike, something his administration has touted as a major accomplishment.

In U.S. supply, crude stocks, gasoline and distillate inventories fell last week, the Energy Information Administration said. Crude inventories posted a surprise draw of 1.4 million barrels to 429.2 million barrels. [EIA/S]

    U.S. gasoline stocks fell more-than-expected by 4.7 million barrels, while distillate stockpiles, which include diesel and heating oil, also posted a larger-than-expected draw, falling by 3.4 million barrels.

"We're definitely seeing supplies of gasoline and diesel fall pretty dramatically," said Phil Flynn, analyst at Price Futures Group in Chicago. "The mantra we've been seeing in recent weeks is the economy is slowing and oil prices were down because of peak demand, but these numbers seem to be holding up a lot better than people would think."

Oil rises to 3-week highs as OPEC+ agrees to deep cuts, U.S. stockpiles fall
 

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Comments (12)
Chad Richer Than You
Chad Richer Than You Oct 05, 2022 2:41PM ET
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Just assass.inate Abdulaziz Al Saud! We indirectly assass.inate Faisal before for oil-related reasons 💀💀
Ma Lu
Ma Lu Oct 05, 2022 1:14PM ET
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The world could be better without the insane use of oil.
Tho Nguyen
Tho Nguyen Oct 05, 2022 12:47PM ET
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This is why the world should not depend on big oil/gas. They are blood sucking animals that only interest is to make more money and doesn’t care about anyone else. Time to switch to renewable energy and shutdown big oil
Bradley Jeko
Bradley Jeko Oct 05, 2022 12:47PM ET
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Because Big Lithium and Big Photovoltaics won’t turn into the same blood sucking animals? Quit fooling yourself kid.
Gary Piccone
Gary Piccone Oct 05, 2022 12:47PM ET
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Until they start fracking for lithium and ev batteries start littering the ocean
Tony Huynh
Tony Huynh Oct 05, 2022 12:22PM ET
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The Saudis, American's allies lol? I don't think they ever did anything to help the US beside the Gulf War.
Teddrick White
Teddrick White Oct 05, 2022 12:08PM ET
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Vengeance is mine
Scott White
Scott White Oct 05, 2022 11:39AM ET
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Let's Go Brandon!
Scott White
Scott White Oct 05, 2022 11:39AM ET
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Let's Go Brandon!
john andre
john andre Oct 05, 2022 11:39AM ET
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Brandon is a disgusting example of a president
srinivasa reddy
srinivasa reddy Oct 05, 2022 7:42AM ET
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opec meeting time pls
srinivasa reddy
srinivasa reddy Oct 05, 2022 7:42AM ET
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opec meeting time pls
Ram singh
Ram singh Oct 05, 2022 6:53AM ET
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OPEC Meeting time plz
Warm Camp
Warm Camp Oct 05, 2022 6:53AM ET
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Likely ended an hour ago.
Emil Abu
Emil Abu Oct 05, 2022 6:53AM ET
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it started 1 houre ago **
 
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