Oil Prices Jump As Market Eyes Another Possible OPEC+ Cut

Crude oil prices jumped on Tuesday ahead of the next OPEC+ meeting as the group dispelled earlier rumors that it could agree to increase crude oil production at its next meeting.

The cost of Brent crude rose $2.07 by 9:45 am ET, to $85.26 per barrel. WTI rose $1.66 per barrel to $78.90—although both benchmarks are still considerably lower than this time last week, and nearly $15 below August levels.

Goldman Sachs on Tuesday supported the market fear that OPEC could once again cut production, sending oil prices higher, saying that it was highly likely that the group would take further measures to stop last week’s price decline and to balance the market.

OPEC+ will meet next week in Vienna on December 4 to determine the output levels for its members for January.

Goldman lowered its price forecasts in recent months mainly due to the dollar, and China’s Covid response—the latter which Goldman feels is much more significant than OPEC’s output levels. The final factor driving Goldman’s recent price downgrades is Russia’s move to push oil onto the market in the runup to the December 5 deadline for the EU’s export ban.

Still, Goldman’s medium-term outlook for 2023 is positive, at $110 a Brent barrel, although Goldman’s global head of commodities Jeff Currie noted that there was still “ a lot of uncertainty” that lies ahead.

Currie sees demand heading downward thanks to China’s aggressive Covid policies and subsequent protests. Still, “I think the key point with China right now is the risk that you get a forced reopening. That means it’ll be self-imposed lockdowns where people don’t want to get on trains, don’t want to get to work and demand goes further south,” Currie said.

By Julianne Geiger for Oilprice.com

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