Oil Prices Rise Ahead of OPEC+ Meeting on Strong Demand

LONDON—Oil prices rose on Tuesday on strong demand, while upcoming sanctions on Russian oil also lent some support to prices.

Brent crude was up 79 cents, or 0.9 percent, to $89.65 per barrel by 1054 GMT after gaining more than 4 percent the previous day.

U.S. crude futures rose 60 cents, or 0.7 percent, to $84.23 a barrel, having gained more than 5 percent the previous day.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+ will hold a meeting on Oct. 5.

Kuwait’s oil minister said OPEC+ would make a suitable decision to guarantee energy supply and to serve the interests of producers and consumers.

Edward Moya, a senior analyst with OANDA, said: “Despite everything going on with the war in Ukraine, OPEC+ has never been this strong and they will do whatever it takes to make sure prices are supported here.”

Production Target

OPEC+ has boosted output this year after record cuts put in place in 2020 when the pandemic slashed demand.

But in recent months, the organization has failed to meet its planned output increases, missing in August by 3.6 million bpd.

The production target cut being considered was justified by the sharp decline in oil prices from recent highs, said Goldman Sachs, adding that this reinforced its bullish outlook on oil.

Swiss lender UBS said going into the year-end it saw several bullish factors that could send crude prices higher, including “recovering Chinese demand, OPEC+ further supply cut, the end of the U.S. Strategic Petroleum Reserve (SPR) release, and the upcoming EU ban on Russian crude exports.”

Top oil traders also said at the Argus European Crude Conference in Geneva on Tuesday that economic headwinds have not yet significantly eroded the world’s demand for oil.

“Oil demand … if you look at the latest data, it’s still doing OK. We were expecting some demand destruction, it did not really happen,” said Frederic Lasserre, global head of market research and analysis at Gunvor Group.

U.S. crude oil stocks were estimated to have increased by around 2 million barrels in the week to Sept. 30, a preliminary Reuters poll showed on Monday.

By Bozorgmehr Sharafedin and Isabel Kua