Oil rises above $78 ahead of OPEC+ meeting

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imageCommodities1 hour ago (Oct 01, 2021 17:45)

© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File Photo

By Laura Sanicola

(Reuters) -Oil rose above $78 a barrel on Friday, within sight of this week’s three-year high, supported by tight supplies due to OPEC+ supply curbs.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meets on Monday. The group is slowly unwinding record output cuts made last year, although sources say it is considering doing more.

Brent crude rose 26 cents, or 0.5%, to $78.57 by 12:01 EDT (1601 GMT), heading for its fourth weekly rise. U.S. West Texas Intermediate (WTI) added 16 cents to $75.19, set for a sixth week of gains.

Brent has risen over 50% this year and reached a three-year high of $80.75 on Tuesday. OPEC+ is facing pressure from consumers such as the United States and India to produce more to help reduce prices.

Bob Yawger director of energy futures at Mizuho, said there are questions about whether members can add more supply to the complex following Monday’s closely watched OPEC+ meeting.

“Only a few members can afford to increase production without giving market share, so it’s really paying lip service to the market to say you can increase significantly,” Yawger said.

Oil is also finding support as a surge in natural gas prices globally prompts power producers to move away from gas. Generators in Pakistan, Bangladesh and the Middle East have started switching fuels.

“The most likely reason for stable oil prices is that investors believe the supply-demand gap will widen as the power crisis worsens,” said Naeem Aslam, analyst at Avatrade.

The market is also watching whether the Democratic-controlled U.S. Congress can advance President Joe Biden’s agenda, with House progressives vowing to block a $1 trillion infrastructure bill without a deal on a larger social spending and climate change bill.

Oil rises above $78 ahead of OPEC+ meeting

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