International oil prices rose more than 2% in Tuesday's trading, off a near nine-month low hit on Monday, on signs that the Organization of the Petroleum Exporting Countries and its partners, known as OPEC+, may implement output cuts to avoid a further slump in prices.
www.reuters.com
As of press time, NYMEX crude oil futures rose 0.82% to $79.11 a barrel on Wednesday; ICE Brent crude oil futures rose 0.74% to $85.46 a barrel.
Oil prices tumbled more than 7% on Friday plus Monday, due to the surge in the dollar made dollar-denominated crude more expensive for non-dollar holders and investors grew increasingly concerned that rising interest rates could trigger a recession, leading to a recession, then reduce fuel demand.
Officials from major producers reacted to the slump in oil prices, saying they may take action to keep prices stable.
Iraqi Oil Minister Abdul-Jabbar said in an interview with Iraqi state television on Monday (September 26) that OPEC+ is monitoring the trend of oil prices and hopes to maintain the market balance,
"We do not want oil prices to rise sharply, and we do not want to see prices collapse. A challenging period, with global factors driving down oil prices, most importantly slowing growth and rising inflation."
OPEC will need to cut production by 500,000 to 1 million barrels per day to keep Brent above $90, said Gary Ross, chief executive of Black Gold Investors LLC. He also expects that oil inventories will continue to build up until the first quarter of next year, despite a drop in Russian oil exports.
"If OPEC doesn't cut production, the market could be at a forward premium in the first quarter of next year. So if they want to see prices stay around $90, they're going to have to cut production."
"We expect NYMEX crude futures to recover to $80 a barrel, while Brent is expected to rebound to $87 a barrel," said Sugandha Sachdeva, vice president of commodity research at Religare Broking.
In the coming months, as the European Union's ban on imports of Russian crude and petroleum products comes into effect, it could also tighten supply and push up prices, although G7 countries hope to minimize supply disruptions by implementing a price cap mechanism.
Fereidun Fesharaki, founder and chairman of energy consultancy FGE, said:
"I think next year stocks will increase as demand slows and production increases ... but it all depends on whether Russian oil continues to flow significantly to international markets."
He added, A successful restart of the Iran nuclear deal would also lead to a surge in inventories and force OPEC+ to cut production.
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