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Oil jumps nearly 4% on possible OPEC+ supply tightening

Commodities Aug 23, 2022 05:20PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford
 
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By Laila Kearney

NEW YORK (Reuters) -Oil prices surged by nearly 4% on Tuesday after Saudi Arabia floated the idea of OPEC+ output cuts to support prices in the case of returning Iranian crude and with the prospect of a drop in U.S. inventories.

The Saudi energy minister said OPEC+ had the means to deal with challenges including cutting production, state news agency SPA said on Monday, citing comments Abdulaziz bin Salman made to Bloomberg.

Global benchmark Brent crude settled at $100.22 a barrel, up $3.74, or 3.9%. U.S. West Texas Intermediate crude closed $3.38, or 3.7%, higher at $93.74 a barrel.

Brent settled at its highest price since Aug. 2 and WTI logged its strongest settlement since Aug. 11.

The prospect of resuming Iranian crude supply and recession fears, along with consecutive weekly builds at the U.S. crude oil storage hub, easing gasoline demand, and the upcoming refinery maintenance season has pushed prices lower in recent weeks and set the tone for OPEC+, said Bob Yawger, director of energy futures at Mizuho.

"That is the situation that's getting the Saudi oil minister a little bit beside himself," Yawger said. "He was stressing the point that the dynamics were a bit out of whack with reality."

In the comments reported on Monday, the Saudi minister said the paper and physical oil markets had become "disconnected."

However, nine OPEC sources told Reuters on Tuesday OPEC+ production cuts may not be imminent and would coincide with the return of Iran to oil markets should Tehran clinch a nuclear deal with the West.

A senior U.S. official told Reuters on Monday that Iran had dropped some of its main demands on resurrecting a deal.

Oil has soared in 2022, coming close in March to an all-time high of $147 after Russia's invasion of Ukraine exacerbated supply concerns. Fears about a global recession, rising inflation and weaker demand have since weighed on prices.

While the price of Brent has fallen sharply from this year's high, the market structure and price differentials in the physical oil market still point to supply tightness.

Underlining tight supply, the latest U.S. inventories weekly reports are expected to show crude stocks declining 900,000 barrels last week.

U.S. crude stockpiles were expected to have fallen, while fuel stocks rose in the latest week, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks fell by about 5.6 million barrels for the week ended Aug. 19. Gasoline inventories rose by about 268,000 barrels, while distillate stocks rose by about 1.1 million barrels, according to the sources, who spoke on condition of anonymity.

API data is followed by the government's report at 10:30 a.m. EDT on Wednesday.

Oil jumps nearly 4% on possible OPEC+ supply tightening
 

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Comments (12)
Aug 24, 2022 1:46AM ET
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OPEC will bring western democracies down...soon right-wing uprising in italy
Brad Albright
Brad Albright Aug 24, 2022 1:46AM ET
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I'm not surprised that you cheer a right wing uprising and the fall of democracy.
jamie
jamie Aug 23, 2022 8:19PM ET
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OPEC grab Democrates neck now, oil produce decline means rapid price up, and it will kill the dovish fr and democrates hope for coming election very clearly.
Trade Flow
Trade Flow Aug 23, 2022 8:19PM ET
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This is still speculations and not facts nor reality. If irani deal closed, price will go down on that and the slowing economy is the main factor in lower price. Same as 2007-2009.
Brad Albright
Brad Albright Aug 23, 2022 8:19PM ET
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Democrates was a Greek philosopher who died a long time ago. I doubt he has any hopes for the upcoming election.
jason xx
jason xx Aug 23, 2022 7:06PM ET
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If opec cuts production we should just nuke them Russia and China in a massive first strike. It would be a great way to cut down on greenhouse gases
jamie
jamie Aug 23, 2022 7:06PM ET
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If US use nuke at sometime, entire US territory will be ground zero. The first nuclear power is not US, it's Russia.
Aug 23, 2022 7:06PM ET
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grow up
nils Hullmann
nils Hullmann Aug 23, 2022 2:25PM ET
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Beautiful soon Politicians in Europe have to flee the Country...its about time Elections in italy coming month will be a blast to witness
nils Hullmann
nils Hullmann Aug 23, 2022 11:15AM ET
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cant wait for the mass unemyployment which will erradicate all those green/gender/migrant bull ******jobs
Show previous replies (1)
ZS Beck
ZS Beck Aug 23, 2022 11:15AM ET
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and why is good for you, if others are suffering A hole?
Brad Albright
Brad Albright Aug 23, 2022 11:15AM ET
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ZS Beck In the US, about 15% of the people think like this. They are miserable and think if they cannot be happy everybody else should be miserable too.
jason xx
jason xx Aug 23, 2022 11:15AM ET
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Brad Albright I think it's just a complete lack of brain cells on top of right wing propaganda being blasted all day.
Aug 23, 2022 11:15AM ET
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hey Jason how is Buttcoin doing ? you know what the problem is with ponzies ? ....it runs out of r_tards
Brad Albright
Brad Albright Aug 23, 2022 11:15AM ET
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You despise a lot of kinds of people. Are you okay? Did someone touch you when you were little?
Andrew Ulferts
Andrew Ulferts Aug 23, 2022 8:30AM ET
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All you people that think oil should be cheap must not know that a barrel is 42 gallons. Oil is the most troublesome resource to acquire. It comes from miles below the earth’s surface. Learn a little more about what it takes to get it to your car and you will appreciate it and the people that get it there.
Tony Huynh
Tony Huynh Aug 23, 2022 8:30AM ET
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Sure, expensive oil will just push more people to buy ev car
David Beckham
David Beckham Aug 23, 2022 8:30AM ET
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I agree with u people should respect them a lot of people work hard to get oil btw please think about how to make electricity now coal natural gas and oil those workers are working hard please respect those work on those industries of course oil companies need to earn mo ey who work for nothing?
Brad Albright
Brad Albright Aug 23, 2022 8:30AM ET
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A lot of people in a lot of fields work hard.
Rick Pol
Rick Pol Aug 23, 2022 8:30AM ET
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All motors can now be switched to run on water 💧. It has already been patented, nothing can stop this and this means all oil and gas production for energy is going to not be needed. The only cost will be a few hundred dollars to add the conversion kit. no need for gas tanks.
jason xx
jason xx Aug 23, 2022 8:30AM ET
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Work hard? Give me a break anything over 60 a barrel is price gouging
jamie
jamie Aug 23, 2022 8:14AM ET
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Opec has right to reduce oil production and manage its price. We should accept that not only US manage the oil price. No.
Brad Albright
Brad Albright Aug 23, 2022 8:14AM ET
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Captain Obvious.
jason xx
jason xx Aug 23, 2022 8:14AM ET
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Where do these donkeys come from? Standing up for Opec? Seriously
Jose Marquez
Jose Marquez Aug 23, 2022 4:26AM ET
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the characters always frightening .. speculating are the same ones that said it reached 300 !!!
jason xx
jason xx Aug 23, 2022 4:26AM ET
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100% Minipulation and the SEC doesn't even lift a finger.
Francis Lim Wei
Francis Lim Wei Aug 23, 2022 3:20AM ET
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let the evil and greedy Saudis be punished by God for inflicting pains and sufferings on the commoners
Matt Kay
Matt Kay Aug 23, 2022 3:20AM ET
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hail satan
Lucky Man
Lucky Man Aug 23, 2022 1:03AM ET
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you see how cruel the OPEC --- indeed they are the one who made the world suffering from this OIL prices...we hope also the rest of the courtries selling Foods to SAUDI at very much higher price too...Saudi will never survive without importation of food so better do the same to them
 
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