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Oil futures rose Thursday as news reports said OPEC+ members reached an agreement in principle to reduce overall crude production by an additional 1 million barrels a day.
The group of major oil producers, who have gathered online for a virtual meeting, will still need to vote on the agreement, news reports said. There are also reports that Brazil plans to become a member of OPEC+ next year.
Price action
-
West Texas Intermediate crude for January delivery
CL00,
-3.37% CLF24,
-3.37%
rose 19 cents, or 0.2% to $78.05 a barrel on the New York Mercantile Exchange after trading as high as $79.60. -
January Brent crude
BRNF24,
-0.47% ,
the global benchmark, was up 71 cents, or 0.9%, at $83.81 a barrel on ICE Futures Europe, ahead of the contract’s expiration at the end of the session. February Brent
BRN00,
-3.19% BRNG24,
-3.19% .
the most actively traded contract, gained 30 cents, or 0.4%, to trade at $83.18 a barrel. -
December gasoline
RBZ23,
-3.90%
climbed 0.9% to $2.3030 a gallon, while December heating oil
HOZ23,
-3.08%
tacked on 0.2% to $2.8938 a gallon. The December contracts expire at the end of the session. -
Natural gas for January delivery
NGF24,
+0.11%
traded at $2.769 per million British thermal units, down 1.2%, after U.S. data revealed an surprise weekly rise in domestic supplies of the fuel.
Market drivers
After several days of wrangling, OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia — reached an agreement to reduce their monthly overall production by an additional 1 million barrels per day, according to The Wall Street Journal and others.
The reduction would be in addition to Saudi Arabia’s much-anticipated extension of its voluntary reduction of the same size, the news report said. The agreement has been made in principle and will still need to be voted on at the meeting Thursday, delegates told Bloomberg.
If this deal is made official, it would put “a floor in prices for crude oil going forward,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.
Meanwhile, news reports said Brazil is set to join OPEC+ in January. Brazil is the largest oil producer in South America.
Zahir said Brazil would not take part in the production cuts if it does join OPEC+. Brazil’s addition, however, would give the Saudis another country to potentially include in any production cuts going forward, and maybe ease some pressures on cuts from countries like Nigeria, he said.
Overall, that would give OPEC “more strength in controlling production and price swings going forward,” said Zahir.
A decision to delay the OPEC+ meeting, which was originally set to take place in person in Vienna on Nov. 26, had previously unsettled the market, stoking fears of a rift between producers that could jeopardize the ability to maintain cuts into 2024. The delay was attributed to objections by OPEC members Nigeria and Angola over proposed production targets.
Also on Thursday, the U.S. Energy Information Administration reported on Thursday that U.S. natural-gas supplies in storage climbed by 10 billion cubic feet for the week ended Nov. 24.
That was a bit of a surprise, with futures prices for natural gas turning lower, as analysts surveyed by S&P Global Commodity Insights, on average, forecast a weekly fall of 10 billion cubic feet.
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