Oil prices rally 1.5% as OPEC+ delays production hike

Oil prices rose sharply in Asian trade on Monday after the OPEC+ said it will delay a planned output hike in December by at least a month, citing recent pressure on prices from weak demand. 

Oil had risen in recent sessions after reports said the cartel was considering such a move, due to pressure on oil prices from concerns over weak demand and higher production outside the cartel. 

Brent oil futures expiring in January rose 1.5% to $74.23 a barrel, while West Texas Intermediate crude futures rose 1.6% to $70.17 a barrel by 20:08 ET (01:18 GMT).  OPEC+ delays Dec. production hike 

The Organization of Petroleum Exporting Countries and allies,  which include Russia, said on Sunday they will delay a planned output hike of 180,000 barrels per day by at least a month.

The cartel had earlier outlined plans to begin winding down its most recent 2.2 million bpd output curbs from December.

But plans to increase production raised concerns in the group about weaker oil prices, especially as prices slid to a near three-year low in September. The OPEC+ had slashed production by nearly 6 million bpd in the past two years to support prices. 

Weakness in China was the biggest point of concern for oil markets, as the world’s biggest oil importer grappled with a prolonged downturn in economic growth. Oil imports to the country also weakened sharply in recent months. US elections, China stimulus in focus 

Oil prices were also aided by a softer dollar , as the greenback retreated in anticipation of the U.S. presidential election this week. Recent polls showed Donald Trump and Kamala Harris were set for a tight race.

Both candidates have promised to increase domestic oil production, which is already at record highs of over 13 million bpd.

Focus this week is also on a meeting of China’s National People’s Congress this week, where policymakers are widely expected to approve more fiscal spending to boost economic growth.

Recent reports said the government could approve as much as $10 trillion in stimulus over the coming years to support growth.

Source: Investing.com