(New York) Oil prices ended in mixed order on Tuesday, with US WTI boosted by a possible further production cut from the Organization of the Petroleum Exporting Countries (OPEC) and positive signs from China.
The price of a barrel of WTI (West Texas Intermediate), with maturity in January, thus gained 1.24%, to close at 78.20 dollars.
As for the price of a barrel of Brent from the North Sea, also for delivery in January, it fell 0.19%, ending at 83.03 dollars.
Before the closing, “prices rose on the hope of an improvement in the health situation in China, after the demonstrations which pressed the government to ease the restrictions”, commented Edward Moya, of Oanda.
For the first time in several weeks, the number of new coronavirus cases recorded in China fell over 24 hours, falling below 40,000 (38,421), according to the Chinese National Health Commission (NHC).
In addition, the NHC has publicly committed to expediting vaccinations for people age 60 and older.
Prices were also initially driven by the prospect of a possible further production cut from OPEC and its OPEC+ allies when they meet next Sunday, according to Hargreaves Lansdown’s Susannah Streeter.
But the trend eased after it was announced that the cartel gathering would eventually take the form of a videoconference, instead of an in-person meeting, as originally planned.
“It increases the likelihood that they won’t change anything” in their production quota, according to Robert Yawger of Mizuho.
According to members of the cartel, quoted by the Wall Street Journal on condition of anonymity, the group is moving well towards a status quo.
This downside was likely to calm the rise in black gold, but, according to the analyst, speculative operators rushed into the breach, buying, from the start of a downturn, which gave a boost to prices.
In addition to these elements, the approach of the entry into force of the European embargo on Russian oil helped to keep the market under tension.
Despite several weeks of discussions, the European Union has not yet reached a consensus on the ceiling price that must be applied to Russian exports, a corollary of the embargo.
“If they cannot agree” on a price, “it would be a factor in lowering prices, because it would allow Russia to continue to sell to China and India without any constraint”, said argue Robert Yawger.
But if agreed, the combination of the embargo and the cap “will lead to significant market tension in early 2023”, warned, in a note, analysts at Commerzbank, who see Brent rising to $95.