Oil prices were mixed early in the week over reports that OPEC+ was looking at a 500k daily production increase.
Analysts are also considering the potential for extended weak demand from China as covid cases continue to soar.
US Oil – Weekly Chart
Oil prices are at their lowest this week ever since early January. The recent bounce back is rooted in reports that Saudi Arabia and other OPEC oil producers are considering a half-million barrel daily output increase.
Oil lost more than $5 a barrel after the Wall Street Journal reported an increase of up to 500,000 barrels per day will be considered at the next OPEC+ meeting on Dec 4.
Following the Saudi Arabia energy minister Prince Abdulaziz bin Salman’s recent comment, oil prices have retreated. The kingdom was not discussing such output increases with other OPEC oil producers, state news agency SPA said, denying the WSJ report.
China reported its first covid death since May and also registered a record high in cases. The government announced new restrictions in Beijing and locked down the largest district in the manufacturing hub of Guangzhou. Traders fear the continued aggressive policy will lead to a further slowdown in economic growth.
Chinese economics was cited as a reason for a $10 cut in the price forecast of Goldman Sachs.
“Investors have been left disappointed by higher-than-expected production and export flows from Russia,” Goldman said in a research note. “This is despite just two weeks remaining before the EU embargo takes effect on crude oil, alongside the G-7 price cap, for which more details are set to be announced next week.
The European Union will stop taking waterborne crude oil imports from Russia to further cut off financing to Russia.
