Oil jumps as OPEC+ mulls biggest production cut since pandemic

OIL surged in early Asian trading after delegates said OPEC+ was considering cutting output by more than 1 million barrels a day when the group meets this week to stem a slide in prices.

West Texas Intermediate futures jumped more than 3%, advancing for the first time in three sessions. While delegates said a final decision on the size of the cuts won’t be made until ministers meet in Vienna on Wednesday, a reduction of that magnitude would be the biggest since the pandemic.

Crude capped its first quarterly decline in more than two years on Friday as concerns over a global economic slowdown weigh on the outlook for energy demand. Banks including JPMorgan Chase & Co. said recently that OPEC+ may need to lower output by least 500,000 barrels a day to stabilize prices.

A huge output cut may draw criticism from the US and other major consumers, which have been battling energy-driven inflation as well as the slowdown. The Organization of Petroleum Exporting Countries and its allies plan to hold their first in-person meeting in Vienna since March 2020.

Prices
  • WTI for November delivery rose 3.2% to $82.03 a barrel on the New York Mercantile Exchange at 6:50 a.m. in Singapore.
    • Futures tumbled 25% in the last quarter.
  • Brent for December settlement gained 3.2% to $87.89 a barrel on the ICE Futures Europe exchange.

China last week issued new quotas for fuel exports and crude imports as it seeks to revive its economy, adding to bullish sentiment for the outlook for oil demand. The world’s biggest crude importer has been hit by Covid lockdowns and a property slump this year. – BLOOMBERG