Oil futures: Brent off highs as dollar rebounds, focus on OPEC+
Quantum Commodity Intelligence – Crude oil futures Friday were slightly lower but heading for the first weekly gains in a month as focus turns to next week's OPEC+ meeting and the extent of the expected cut.
Front-month December ICE Brent futures were trading at $86.69/barrel (1550 GMT), compared to the day's high of $88.64/b and Thursday's settle of $87.18/b, while Nov22 was trading $88.29/b close to expiry.
At the same time Dec22 NYMEX WTI was trading $80.99/b, versus Thursday's settle of $81.23/b
Both benchmarks were up 2.5-3% on the week.
Most analyst say that a cut in OPEC+ quotas appears baked in when the alliance meets on 5 Oct., although any headline cut will fall short in reality with the producer group currently missing production quotas by around 3.4 million bpd.
"There is increasing noise that OPEC+ will be looking to agree on an oil production cut at their meeting next week, given the broader pressure that we have seen on oil prices," said Warren Patterson, head of ING's commodity research.
"However, since reports that Russia had proposed a 1 million bpd supply cut, there have been no suggestions from other members on the potential size of any cut," added Patterson.
Craig Erlam, a senior market analyst at Oanda, said there is no consensus yet among OPEC+ members and a potential winter-supply crunch may pressurize the group to only announce a smaller cut than the floated 1 million bpd.
"The question is whether they'll take the leap given the enormous uncertainty in the economic outlook at this point. Or whether they'll opt for another, slightly more forceful, warning to the markets to not get carried away speculatively pushing prices lower."
Meanwhile, the Dollar Index initially continued to retreat from this week's 20-year highs of above 114.50 points after the People's Bank of China told major state-run banks to prepare to shed dollar holdings while buying up offshore yuan.
At one point the dollar basket dropped to around 111.70 before rebounding to above 112 points.
Crude prices were also underpinned with diesel cracks in Europe heading towards $50/b as European supply tightens at the start of the autumn maintenance season, exacerbated by industrial action in France and the return of energy security concerns in the Baltic.
