Oil jumps nearly 3% after OPEC+ delays output hike, US election in focus
By Arathy Somasekhar
(Reuters) -Oil prices climbed nearly 3% on Monday on OPEC+'s decision to delay plans to increase output by a month, while the market braced for a critical week in which Americans will elect a new president.
Brent futures were up $2.05, or 2.8%, at $75.15 a barrel by 12:50 p.m. ET (1750 GMT). U.S. West Texas Intermediate (WTI) crude rose $2.09, or 3.0%, to $71.56.
On Sunday, OPEC+ said it would extend its output cut of 2.2 million barrels per day (bpd) for another month in December, with an increase already delayed from October because of falling prices and weak demand.
OPEC+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, had been due to increase monthly output by 180,000 bpd from December.
The extension through all of the fourth quarter of 2024 "casts doubt on the group's commitment (or wherewithal) to return supply at all" in 2025, said Walt Chancellor, an energy strategist at Macquarie, adding that the announcement may allay some fears of a renewed OPEC+ "price war."
OPEC remains very positive on demand for oil in both the short and long term, Secretary General Haitham Al Ghais said at an energy industry event in Abu Dhabi on Monday.
French oil major TotalEnergies (EPA:TTEF ) forecast global oil demand will peak after 2030 in its two most likely energy transition scenarios in its annual energy outlook report.
Meanwhile, the CEO of Italian energy company Eni said that OPEC+ oil supply cuts and recent efforts to unwind them had increased volatility in energy markets and hampered investment in new production.
OPEC oil output rebounded in October from its lowest this year the previous month as Libya resolved a political crisis, a Reuters survey found, although a further Iraqi effort to meet its cuts pledged to the wider OPEC+ alliance limited the gain.
POLITICAL CRISIS
U.S. Democratic nominee Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls ahead of Tuesday's Election Day, and the winner might not be known for days after voting ends.
Investors also watched for any escalation in Middle East tensions.
On Thursday, U.S. news website Axios said Israeli intelligence suggested that Iran was preparing to attack Israel from Iraq within days, citing two unidentified Israeli sources.
"Middle East tensions are once again on the forefront as traders await the Iranian response attack," said Dennis Kissler, senior vice president of trading at BOK Financial.
"That, along with the latest declines in crude inventory numbers with gasoline inventories near a two-year low, is keeping buyers present in the crude space," he added.
U.S. stocks of gasoline fell to 210.9 million barrels in the week to Oct. 25, their lowest since November 2022, data from the U.S. Energy Information Administration showed on Wednesday.
Analysts expect further draws this week in gasoline and distillate inventories, while crude stocks are estimates to rise.
Markets were also watching a new tropical storm expected to be named Rafael that was forecast to form on Monday in the Caribbean and eventually threaten parts of the U.S. along the Gulf of Mexico and offshore oil production.
Shell (LON:SHEL ) said it was moving non-essential personnel from six of its platforms to shore, adding that it currently expects no other impacts on its production across the Gulf of Mexico.
Investor focus this week will be on the U.S. Federal Reserve as economists expect interest rates to be cut by 25 basis points on Thursday, and on China, where the Standing Committee of the National People's Congress meets and is expected to approve additional stimulus to boost the slowing economy.
Source: Investing.com
