Despite the drop in prices, oil markets are reassured as “OPEC +” prepares for the “crisis meeting”

Crude oil prices fell again on the return of concerns about weak demand and the possibility of raising interest rates.
Prices received some support after the European Union said that the atmosphere is less optimistic about reaching a quick agreement to revive the nuclear agreement, which means delaying the return of about one million barrels per day of crude to the market.
He told Al-Eqtisadiah, oil analysts, that “OPEC +” sent a clear signal of the group’s readiness to intervene in the market and re-meet “at any time”, considering that the group’s decision to cut production came out of a strong conviction that many of the “OPEC +” countries are struggling with In order to reach the quotas already required.
Analysts pointed out that fears of the global economic slowdown dominate the market, as the group seeks to stabilize and balance the market, noting that the group’s latest decision is the first reduction in production targets in 22 months and restores shares to levels last August.
They pointed out that some OPEC + countries continue to suffer from a lack of investment or some other technical problems, noting the vigilance of “OPEC +” in monitoring the market situation more, especially with the discussions of the Group of Seven regarding setting a price ceiling for Russian oil and gas, explaining that there is a lot of uncertainties in the market.
Sven Schimmel, director of the German company “VG Industry”, said that prices fell, although the decision to reduce supply supports the opportunities for price growth, which was already achieved immediately after the decision, but the market evaluated the level of reduction that it promised symbolically, noting that in practice most of the people are struggling. OPEC + countries have already reached the level of their quotas.
He stressed that the group’s readiness to hold a new meeting before the coming of the monthly meeting on October 5 next reassures the market of the preparedness and readiness of producers and their desire to intervene quickly in times of crisis to support stability and balance, especially that the current market situation is characterized by uncertainty and the wide impact of geopolitical risks on it.
For his part, Robin Noble, director of the international consulting company “Occera”, stated that the desire to reduce production supports the chances of reaching higher price targets, but “OPEC” from the beginning confirmed that it did not target any price levels, but rather worked on balancing the market and keeping the fundamentals in a good and stable condition. and reduce the repercussions of geopolitical risks on them.
He pointed to the importance of the warnings issued by the technical committee of the “OPEC +” alliance, especially with regard to the lack of liquidity and the fact that the reserve capacity remains very limited, in addition to the fact that the risk of severe turmoil remains high in the market, indicating that the reduction in production came in the interest of the market and according to the producers’ vision and despite the pressures Extensive efforts made by consumers to increase production despite the current difficulties in new investments in the industry.
For his part, Marcus Krug, senior analyst at A Control for oil and gas research, said that fears of supply shortages have returned to the fore in the market, indicating that the end of this year will witness wide challenges in the energy market, especially in the winter season, which is witnessing a significant increase in consumption and exacerbation. The crisis comes with the start of the European Union banning imports of Russian seaborne crude next December, and the Group of Seven countries heading to finalize a plan to impose a ceiling on the prices of Russian crude oil exports.
In turn, Naila Hengstler, director of the Middle East Department at the Austrian Federal Chamber, confirmed that the prospects for high oil consumption for power generation this winter with the exhaustion of gas supplies kept actual crude oil prices higher than their counterparts in future contracts, while price increases curbed the possibility of a global recession driven in part. Much of it is the rise in energy prices.
She pointed out that the renewed closure measures in many Chinese cities renewed fears of a slowdown in oil demand, while on the supply side the nuclear agreement is still faltering in plans to revive it, indicating that the new production cut will help preserve some spare capacity in the event of an uninterrupted global supply disruption. Expected in the future, which is what producers in “OPEC +” are keen to hedge.
With regard to prices, oil fell yesterday, after its two-day rise, with the return of concern about weak demand and the possibility of raising interest rates, for crude to abandon the support it obtained from the first reduction in production targets announced by “OPEC +” since 2020.
New closures to curb the outbreak of COVID-19 in China have heightened fears that high inflation and higher interest rates will affect demand. The European Central Bank is widely expected to raise interest rates sharply when it meets tomorrow.
According to “Archyde.com”, Brent crude futures fell $2.33, or 2.4 percent, to $93.41 a barrel during trading yesterday.
US West Texas Intermediate crude futures fell from Monday’s trading to $87.02 a barrel, up 15 cents from Friday’s close. Markets were closed in the United States on Monday for the Labor Day holiday.
The Organization of Petroleum Exporting Countries “OPEC” and its allies, led by Russia, a group known as “OPEC +” decided on Monday to reduce the production target for October by 100,000 barrels per day. Prices rose Friday before the meeting and Monday after the decision.
“The decision to cut production by 100,000 barrels per day was more symbolic than fundamental in terms of fundamentals. But it will make traders think twice about pushing prices lower as they have done recently,” said Craig Erlam, analyst at brokerage Oanda.
As a result of the US holiday, weekly US inventory data from the American Petroleum Institute and the Energy Information Administration will be released on Wednesday and Thursday, a day later than usual.
On the other hand, the “OPEC” crude basket rose, and its price reached $99.84 a barrel on Monday, compared to $99.22 a barrel the previous day.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) stated yesterday that the price of the basket, which includes average prices of 13 crudes from the production of member countries of the organization, achieved the second rise after previous declines, and that the basket lost about seven dollars compared to the same day last week, when it recorded 106.41 dollars per barrel. .

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