July 12, 2024

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Oil Rises as Traders Parse OPEC+ Signals, Fed’s Rate Comments

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(Bloomberg) — Oil rose as OPEC+ members continued negotiations over output levels and a Federal Reserve official signaled the central bank’s rate-hiking campaign may be complete.

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West Texas Intermediate rose as much as 2.9% to trade near $77 as the production cartel worked to resolve the deadlock over oil-output quotas for some African nations. The stalemate may not be resolved before the group’s scheduled meeting, possibly requiring further delay, one delegate said. Meanwhile in Washington, Fed Governor Christopher Waller said in prepared remarks that he’s “increasingly confident” that monetary policy is tight enough to reduce inflation.

Crude futures have moved into a broad holding pattern ahead of the OPEC+ meeting planned for Thursday, with traders awaiting a decision on next year’s output levels. Among the particular hurdles are production quotas for African members Nigeria and Angola, which have frequently underproduced in recent years.

The dollar’s decline, which is “tied to the market’s growing expectations for the Fed to cut rates,” is boosting commodities Tuesday, said Daniel Ghali, a commodity strategist at TD Securities.

The group is heading into the meeting with prices having dropped by about a fifth since late September due to plentiful supplies and concerns about the global economy. The relative weakness has fueled expectations that the group will embark on deeper supply cuts.

Away from the OPEC+ meeting, supplies from Kazakhstan are at risk after a massive storm swept through the Black Sea and interrupted loadings at the port that handles the country’s crude shipments. The nation’s largest oil producer said it could halve output Tuesday to the equivalent of about 300,000 barrels a day.

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2023-11-28 13:45:36

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