With expectations that OPEC and its partners may contemplate even larger production cutbacks when they meet this weekend, oil rose to an intraday high.
After futures previously fell to the lowest level since 2021, West Texas Intermediate reversed course and increased by as much as 2.1% to an intraday high of $77.84. The world’s largest crude importer saw protests over the weekend against strong anti-Covid policies, which sparked a broad selloff of commodities as the week began.
With physical markets also under pressure, the nearest part of the Brent and WTI futures curves turned into contango, a negative shape signifying oversupply. Last week, optimistic bets were significantly decreased by traders, who posted the sixth-largest decline in net-long positions for Brent in history.
Delegates from the group, who up until this week expected they would pause to consider the impact of the reductions, now believe greater reductions could be a possibility as the oil market appears to be getting more unstable.
While the European Union states discuss plans for a price ceiling on Russian crude, OPEC+ will meet on Sunday to decide on its next output level. With conditions appearing favorable for another output cut, the market’s fragile structure is probably causing OPEC some stress as it prepares for the summit, according to Eurasia Group.
Original article posted here.