Oil prices have rebounded from the early decline as reports on OPEC+ production differed

NEW YORK (Reuters) – Oil prices fell on Monday, falling early to their lowest since early January, but then rebounded as reports mixed on whether Saudi Arabia and other OPEC oil producers were considering raising daily output by half a million barrels.

Brent crude futures for January fell 77 cents, or 0.9 percent, to $86.85 a barrel by 12:54 pm EST (1754 GMT). US West Texas Intermediate (WTI) crude futures for December fell 58 cents, or 0.7%, to $79.50 before the contract expires later on Monday.

Both benchmarks fell more than $5 a barrel early on, after the Wall Street Journal reported that an increase of up to 500,000 barrels per day would be considered at the OPEC+ meeting on Dec. 4.

Oil recouped most of its losses after Saudi Energy Minister Prince Abdulaziz bin Salman said the kingdom was not discussing a possible increase in oil production with other OPEC oil producers, the official Saudi Press Agency reported, denying the magazine’s report. Read more

“He turned the situation on its head in a matter of minutes,” said John Kilduff, partner at Again Capital LLC in New York. “The Saudis give and then take away.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, recently cut production targets and Saudi Arabia’s energy minister, the de-facto leader, was quoted as saying this month that the group would remain cautious.

The release of more oil amid weak Chinese demand for fuel and a stronger US dollar would have pushed the market deeper into conservancy, encouraging more oil to go into storage and pushing up prices, said Bob Yawger, director of energy futures at Mizuho in New York. to decline. “This is playing with fire.”

Expectations of further interest rate increases boosted the dollar, making dollar-denominated commodities such as crude oil more expensive for investors.

The dollar rose 0.9% against the Japanese yen to 141.665 yen, on pace for its biggest one-day gain since Oct. 14. read more

“Aside from the weak demand outlook due to China’s COVID restrictions, the recovery in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Ting.

“Risk sentiment has become fragile as all the recent economic data from major countries point to a recessionary scenario, especially in the UK and the Eurozone,” she said, adding that hawkish comments from the US Federal Reserve last week also raised concerns about the US economy. prospects.

The numbers of new coronavirus cases in China remained close to its April peak as the country battled a nationwide outbreak.

The front month Brent crude futures spread narrowed sharply last week while WTI flipped into hold status, reflecting concerns of dwindling supplies.

Additional reporting by Noah Browning, Florence Tan and Emily Chow Editing by David Goodman, David Gregorio and Chris Reese

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