- Brent was up 0.8% and WTI was up 0.9% at 0430 GMT
- OPEC+ is sticking to its plan to cut production by 2 million bpd
- More Chinese cities are easing COVID-19 restrictions
MELBOURNE, Dec 5 (Reuters): Oil prices rose as much as 2% on Monday after OPEC+ countries held production targets steady ahead of European Union sanctions and a hike in Russian crude prices.
Meanwhile, in a positive sign for fuel demand, more Chinese cities eased COVID-19 restrictions over the weekend, although a patchwork easing of policies sowed confusion across the country on Monday.
Brent crude futures were up 72 cents, or 0.8%, at $86.29 a barrel by 0430 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 70 cents, or 0.9%, at $80.68 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively known as OPEC+, agreed on Sunday to stick to their October plan to cut production by 2 million barrels per day (bpd) from November to 2023.
Analysts said the OPEC+ decision was expected as major producers waited to see the impact of the EU import ban and the Group of Seven (G7) seaborne Russian oil price ceiling of $60 a barrel. hat
“Even though OPEC held production steady over the weekend, I expect them to continue to balance the market,” said Baden Moore, head of commodities research at National Australia Bank.
“(A) roll-off of SPR releases, EU sanctions and implementation of the price cap law are tightening the market, although we expect the market has already positioned itself for this view,” he said, referring to the US strategy. Petroleum reserves.
The European Union needs to replace Russian crude with oil from the Middle East, West Africa and the United States, which will keep oil prices under pressure, at least in the near term, Wood Mackenzie Vice President Ann Louise Hittle said in a note. .
“Despite the EU oil import ban on Russian crude and the G7 price cap, expectations of slower demand growth are currently holding prices down. The adjustment to the EU ban and price cap is likely to temporarily support prices,” Hittle said.
China’s zero-covid policy has been a major factor affecting demand, but that now appears to be easing after protests in several cities, including Beijing and Shanghai, eased restrictions to varying degrees.
EU sanctions on Russian oil products, in addition to crude oil, from February 5 should support crude demand in the first quarter of 2023, as the market is short of diesel and heating oil.
Reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by Cynthia Osterman and Kenneth Maxwell
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