Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Oil prices settle up as Iraq backs more output cuts from OPEC+

Published 10/11/2023, 02:58
Updated 10/11/2023, 20:41
© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019.  REUTERS/Angus Mordant/File Photo

By Scott DiSavino

NEW YORK (Reuters) -Oil prices gained about 2% on Friday as Iraq voiced support for OPEC+'s oil cuts ahead of a meeting in two weeks and as some speculators covered massive short positions ahead of weekend uncertainty.

Still, prices settled with weekly losses of 4%, their third straight weekly decline.

"This was the perfect technical storm. We came into this week with an almost record short position and now we're seeing some short covering going into the weekend," said Phil Flynn, an analyst at Price Futures Group.

Flynn noted that in addition to Iraq's comments, Saudi Arabia and Russia confirmed this week that they would continue oil output cuts through year end.

In the U.S., energy firms cut the number of oil rigs operating for a second week in a row to the lowest since January 2022, energy services firm Baker Hughes said. The rig count points to future output. Brent futures rose $1.42, or 1.8%, to settle at $81.43 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.43, or 1.9%, to settle at $77.17.

Brent and WTI notched their third straight weekly losses for the first time since May, although both benchmarks exited technically oversold territory.

"Concerns about demand have replaced the fear of production outages related to the Middle East conflict," analysts at Commerzbank (ETR:CBKG) said.

Weak Chinese economic data this week increased worries of faltering demand. Refiners in China, the largest buyer of crude from Saudi Arabia, the world's largest exporter, asked for less supply for December.

U.S. consumer sentiment fell for a fourth straight month in November and households' expectations for inflation rose again.

U.S. Federal Reserve Bank of San Francisco President Mary Daly said she is not ready to say yet whether the Fed is done raising rates, echoing Fed Chair Jerome Powell's comments on Thursday.

Higher interest rates can reduce oil demand by slowing economic growth.

In Britain, the stagnating economy failed to grow in the July-to-September period but did avoid a recession, according to the UK's Office for National Statistics.

UPCOMING OPEC MEETING

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, will meet on Nov. 26.

Iraq's oil ministry said Baghdad is committed to the OPEC+ agreement on determining production levels.

Chances Saudi Arabia will extend its output cut into the first quarter of 2024 "is certainly increasing given renewed market concerns about Chinese demand and the broader macro outlook," RBC Capital Markets analyst Helima Croft said.

© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019.  REUTERS/Angus Mordant/File Photo

Analysts at Capital Economics said OPEC+ might cut supply further if prices continue to fall.

"We are sticking with our forecast of Brent ending both this year and next year at around $85 per barrel," the research firm said in the note.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.