Oil prices up on signs OPEC may cut output

After plunging to nine-month lows a day earlier, oil prices went up on Tuesday, on indications that producer alliance OPEC might enact output cuts to avoid a collapse in prices.

By 0502 GMT, the price of crude futures for November settlement rose 65 cents, or 0.77 per cent, to $84.71 per barrel. U.S. West Texas Intermediate WTI crude futures for November delivery were up 64 cents at $77.35 per barrel.

In the previous two trading sessions, Brent plunged 7.1 per cent, while WTI fell 8.1 per cent under the pressure of a dollar that makes greenback-denominated crude more expensive for the buyer using other currencies and mounting concerns that rising interest rates will cause a recession that will curtail fuel demand.

The easing of the dollar gave some relief to the oil market on Tuesday. The dollar index was off a bit from the 20 year high that was touched on the previous day.

Officials from major producers reacted to the declines by saying they may take action to keep price stability.

Iraqi Oil Minister Ihsan Abdul Jabbar said on Monday that the Organization of the Petroleum Exporting Countries OPEC and allies including Russia are monitoring the oil price situation and want to maintain balance in the markets.

In an interview with Iraqi state TV, he said that we don't want a collapse in oil prices or a rise in oil prices.

Analysts said further sell offs in the oil markets could see OPEC intervene to support prices by collectively reducing their output.

If we want to see cuts, they need to be a bit larger than the 100,000 barrels per day bpd agreed at the last meeting, according to analysts at ING Economics.

The OPEC boosted output this year after record cuts were put in place in 2020 because of demand destruction caused by the COVID-19 pandemic. In recent months, the organization has failed to meet its planned output increases, undermining the effectiveness of any announced output reductions.

There is a jittery market due to a lack of clarity over a planned European Union price cap on Russian oil exports that is expected to start in December due to the Russia-Ukraine war.

Cyprus and Hungary are among the countries that have expressed opposition to the proposal. There were expectations of a deal this week, but that now looks unlikely, ANZ Research said in a note.

The expected arrival of Hurricane Ian caused BP Plc and Chevron Corp CVX.N to shut down production on Monday at offshore oil platforms in the Gulf of Mexico, the top U.S. offshore production region.

The Category 2 storm was predicted to become a major hurricane within two days, and is expected to cause a major hurricane in the Caribbean.