Oil up over 2% on tighter supply while OPEC+ talks limit gains (updated)

S-Energy

30/11/2022 04:46

* 
      API data shows fall in U.S. crude stocks
    

        * 
      Optimism on China fuel demand, economic outlook evident
    

        * 
      IEA expects Russian crude output to fall by 2 mln bpd by
March
    

        * 
      OPEC+ virtual meeting signals potentially limited policy
change
    

  
 (Updates throughout, changes dateline to London)
    By Rowena Edwards
       LONDON, Nov 30 (Reuters) - Oil prices rose by over 2% on
Wednesday on signs of tighter supply, a weaker dollar and
optimism over a Chinese demand recovery.
    But the likelihood that OPEC+ will leave output unchanged at
its upcoming meeting limited the gains.
    Brent crude futures  LCOc1  rose $2.06, or 2.48% to $85.09
per barrel by 1044 GMT. The more active February Brent crude
contract  LCOc2  rose by 2.02% to $85.95. 
     U.S. West Texas Intermediate (WTI) crude  CLc1  futures
climbed $1.69, or 2.16%, to $79.89.
    Support followed expectations of tighter crude supply. 
    U.S. crude oil stocks dropped by 7.9 million barrels in the
week ended Nov. 25, according to market sources citing American
Petroleum Institute figures on Tuesday.  API/S 
    Official figures are due from the U.S Energy Information
Administration on Wednesday.  EIA/S 
    And the International Energy Agency expects Russian crude
production to be curtailed by some 2 million barrels of oil per
day by the end of the first quarter next year, its chief Fatih
Birol told Reuters on Tuesday.
    On the demand side, further support came from optimism over
a demand recovery in China, the world's largest crude buyer. 
    China reported fewer COVID-19 infections than on Tuesday,
while the market speculated that weekend protests could prompt
an easing in travel restrictions. 
    Guangzhou, a southern city, relaxed COVID prevention rules
in several districts on Wednesday.
    A fall in the U.S. dollar  =USD  was also bearish for
prices. A weaker greenback makes dollar-denominated oil
contracts cheaper for holders of other currencies, and boosts
demand.
    Fed Chair Jerome Powell is scheduled to speak about the
economy and labour market on Wednesday, with investors looking
for clues about when the Fed will slow the pace of its
aggressive interest rate hikes.
    Capping gains, the OPEC+ decision to hold its Dec. 4 meeting
virtually signals little likelihood of a policy change, a source
with direct knowledge of the matter told Reuters on Wednesday.
    "Market fundamentals favour another cut, especially given
the uncertainty over China's COVID situation ... Failure to do
so risks sparking another selling frenzy," said Stephen Brennock
of oil broker PVM.
 (Reporting by Rowena Edwards, additional reporting by Laila
Kearney in New York and Trixie Yap in Singapore; Editing by
Louise Heavens)
 ((Rowena.Edwards@thomsonreuters.com;))