(Bloomberg) — Oil rose as OPEC+ delegates said deeper production cuts could be an option when they meet this weekend.
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West Texas Intermediate rose 1.3% to settle above $77 a barrel. Earlier in the session, oil prices slumped below $74 to the lowest since December as protests over harsh anti-Covid measures erupted across China triggered a broad selloff in commodities and equity markets. With the oil market’s structure looking increasingly weak, delegates from the group say additional reductions could be an option.
The nearest portion of the Brent and WTI futures curves flipped into contango — a bearish structure indicating oversupply — with physical markets also under pressure. Speculators markedly reduced bullish bets, posting the sixth-largest reduction in net-long positions on record for Brent last week. Underscoring the market’s shaky fundamentals, JPMorgan Chase & Co. reduced its Brent crude forecast by $8 to $90 as it expects Russian production to hit prewar levels by mid-2023.
OPEC+ will meet Sunday to decide on its next output level, while European Union nations debate whether to set a price cap as low as $62 a barrel on exports of Russian crude oil. Several countries demanded a level that could put more pressure on Moscow, but the talks remain stuck, diplomats said.
Over the weekend, the US moved to grant supermajor Chevron Corp. a license to resume oil production in Venezuela after sanctions halted all drilling activities almost three years ago. The sanctions relief comes after Norwegian mediators announced the restart of political talks between President Nicolas Maduro and the opposition. Yet Chevron’s CEO Mike Wirth said it might take years to begin to refurbish those oil fields, meaning additional output won’t be immediate.
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