Investing.com — Oil prices rallied on Monday, rising a wave optimism that major oil producers could discuss deepening output cuts when they meet later this month.
By 14:30 ET (19:30) GMT, the futures settled 2.3% higher at $77.60 a barrel, while the contract climbed 2.1% to $82.32 a barrel.
Another cut to global supply?
The crude benchmarks gained around 4% on Friday and have continued to rise Monday after Reuters reported, citing sources, that the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, is set to consider whether to make additional oil supply cuts to shore up prices when it meets on Nov. 26.
The group has already pledged total oil output cuts of 5.16 million barrels per day, or about 5% of daily global demand, in a series of steps that started in late 2022.
These cuts include additional voluntary cuts by Saudi Arabia and Russia, and the two major producers have vowed to continue their supply cuts until the end of the year, but may decide to announce more reductions to support prices further.
“We continue to expect that Saudi Arabia and Russia will roll over their additional voluntary cuts into early 2024. However, what is less clear is whether the broader OPEC+ group will make further cuts,” said analysts at ING, in a note.
“A deeper group cut combined with the Saudis and Russians rolling over their voluntary cut would be more than enough to ensure that the surplus currently expected in 1Q24 disappears.”
China promises more support for property sector
Adding to today’s positive tone, China’s central bank kept its benchmark unchanged at record low levels earlier Monday, and regulators vowed to provide more policy support to the beleaguered real estate sector, a major driver of the second-largest economy.
While Chinese oil imports have remained steady over the past year, worsening economic conditions in the country have raised doubts over whether oil demand will remain strong. China has also built up a high level of oil inventories, and recently placed stricter curbs on local refineries.
U.S. inventories point to ample supply
Although the crude benchmarks posted gains on Friday, they still closed the week lower as a whole, their fourth straight week of losses, on concerns of worsening demand, and as data, particularly from the U.S., suggested that supplies were not as tight as initially expected.
Data released last week showed a bigger-than-expected increase in U.S. oil , while production also remained close to record-high levels.
Additionally, weak economic numbers from several major economies ramped up concerns that global oil demand will slow in the coming months.
(Peter Nurse and Ambar Warrick contributed to this item.)