Oil is rebounding from an early plunge after the Saudis denied the OPEC+ production report

  • The official Saudi Press Agency says the kingdom is not discussing increasing the force
  • Chinese demand concerns and a strong dollar are also weighing on prices

NEW YORK (Reuters) – Oil prices rebounded from early losses on Monday after Saudi Arabia denied a report it said it was discussing increasing oil supply with OPEC and its allies.

Brent crude futures for January settled at $87.45, down 17 cents. US West Texas Intermediate crude futures for December settled at $79.73 a barrel, down 35 cents before the contract expires later on Monday.

The most active January contract fell 7 cents to $80.04 a barrel.

Both benchmarks fell more than $5 a barrel early, hitting a 10-month low, after The Wall Street Journal reported that an increase of up to 500,000 barrels per day would be considered at the OPEC+ meeting on Dec. 4.

The official Saudi Press Agency reported that oil recovered its losses after that, after Saudi Energy Minister Prince Abdulaziz bin Salman said that the kingdom is committed to production cuts and is not discussing a possible increase in oil production with other oil producers in OPEC, denying the newspaper’s report.

“He turned the situation on its head in a matter of minutes,” said John Kilduff, partner at Again Capital LLC in New York. “The Saudis give and then take away.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, recently cut production targets and the energy minister of Saudi Arabia, the de-facto leader, was quoted as saying this month that the organization would remain cautious.

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The release of more oil amid weak Chinese demand for fuel and a stronger US dollar would have pushed the market deeper into conservancy, encouraging more oil to go into storage and pushing up prices, said Bob Yawger, director of energy futures at Mizuho in New York. to decline. “This is playing with fire.”

Expectations of further interest rate increases boosted the dollar, making dollar-denominated commodities such as crude oil more expensive for investors.

The dollar rose 0.9% against the Japanese yen to 141.665 yen, on pace for its biggest one-day gain since Oct. 14. read more

“Aside from the weak demand outlook due to China’s COVID restrictions, the recovery in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Ting.

“Risk sentiment has become fragile as all the recent economic data from major countries point to a recessionary scenario, especially in the UK and the Eurozone,” she said, adding that hawkish comments from the US Federal Reserve last week also raised concerns about the US economy. prospects.

The numbers of new coronavirus cases in China remained close to its April peak as the country battled a nationwide outbreak.

The spread of Brent crude futures to the front month contracted sharply last week, while WTI flipped to hold status, reflecting concerns of dwindling supplies.

Additional reporting by Laila Kearney in New York Additional reporting by Noah Browning, Florence Tan and Emily Chow Editing by Chris Reese and Matthew Lewis

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