Oil prices climb after OPEC+ keeps output cut targets, China eases COVID curbs

  • Brent rose 0.8%, WTI 0.9% by 0430 GMT.
  • OPEC+ plans to cut production by 2 million bpd.
  • More Chinese cities relax Covid-19 restrictions

MELBOURNE, Dec 5 (Reuters) – Oil prices rose as much as 2 percent on Monday after OPEC+ nations met their production targets ahead of the EU ban and price cap on Russian crude.

At the same time, in a positive sign for oil demand, many Chinese cities eased COVID-19 restrictions over the weekend, although the easing in policies caused confusion across the country on Monday.

Brent crude futures added 72 cents, or 0.8%, to $86.29 a barrel by 0430 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 70 cents, or 0.9%, to $80.68 a barrel.

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The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, including Russia, agreed in October to stick to their October plan to cut production by 2 million barrels a day until November 2023.

Analysts said the OPEC+ decision is expected as major producers wait to see the impact of the European Union’s import ban and the Group of Seven’s (G7) $60 barrel price on Russian oil at sea, with Russia threatening to cut supply to any country that follows suit. Cap.

“While OPEC will be steady on output over the weekend, I expect they will continue to balance the market,” said Baden Moore, head of commodities research at National Australia Bank.

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“(A) SPR release and EU sanctions and price revisions have acted to tighten the market, although we expect the market to be pre-positioned for this view,” he said, citing a US strategist. Fuel storage.

Wood Mackenzie Vice President Ann Louise Hittle said in a note that the EU should replace Russian crude with oil from the Middle East, West Africa and the United States, which should put a floor on oil prices, at least in the near term. .

“Currently, despite the EU oil ban on Russian crude and the G7 price cap, prices are falling at the expected pace of demand growth. The adjustment to the EU ban and price ceiling may support prices for the time being,” he said.

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A key factor weighing on demand is China’s zero-covid policy, but that now appears to be easing after opponents including Beijing and Shanghai followed suit, relaxing restrictions at various stages.

As the market is short of diesel and heating oil, the European Union’s ban on Russian oil imports from February 5 should support crude demand in the first quarter of 2023, in addition to crude oil, Hittle added.

Reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by Cynthia Osterman and Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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