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Crude oil prices jumped by 3% early on Monday, just as the Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ oil producer group began its regular monthly meeting that precedes the OPEC+ ministerial gathering set to review market conditions and decide on crude output quotas for October.
As of 7:35 a.m. ET on Monday, the U.S. benchmark, WTI Crude, was closing in at $90 a barrel and traded up 3.11% at $89.59. The international benchmark, Brent Crude, was up by 3.39% on the day at $96.20.
The JMMC meeting typically gives recommendations to the full ministerial OPEC+ meeting on a course of action. At today’s meeting, OPEC+ is largely expected to keep production quotas for October unchanged from September levels, although speculation in recent days that the alliance could resort to cuts supported oil prices on Friday and early on Monday.
The group, in theory, rolled back by the end of August all the massive cuts from May 2020, but it’s estimated to be 2.9 million barrels per day (bpd) below the collective target.
“We believe that OPEC+ will leave output targets unchanged for next month. It is difficult to justify cutting output when the market is trading near US$100/bbl,” Warren Patterson, Head of Commodities Strategy at ING, said ahead of the meeting on Monday.
“In addition, Russia is reportedly against cutting output as it sends the wrong signal to the market about the supply and demand picture. Furthermore, it would make more sense for OPEC+ to wait for further clarity on Iranian nuclear talks before taking any action,” ING says.
Oil prices were also supported on Monday by a jump in diesel futures in Europe and the U.S. after Russia said late on Friday that the Nord Stream gas pipeline to Germany would remain closed indefinitely.
“The European energy crisis adds further support to gas-to-fuel switching activity,” Saxo Bank said today.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com