Oil prices above $83 a barrel as OPEC mulls output cut

After the biggest one day gain since May, the market looked to OPEC to deliver on expectations for a major cut in supply.

West Texas Intermediate traded above $83 a barrel after rallying by more than 5% on Monday. The Organization of Petroleum Exporting Countries and its allies, including Russia, will consider reducing output by more than 1 million barrels a day when they meet on Wednesday, according to delegates.

In the last quarter, oil fell 25% as central banks including the Federal ReserveFederal Reserve raised rates aggressively to combat runaway inflation. The shift to tighter monetary policy spurred speculation of a slowdown in global growth, hurting demand for commodities that were also hit by a surging dollar.

The first in-person meeting of the group since the Pandemic forced the group online will be the OPEC gathering in Vienna. The ministers plan to hold a press conference after their session, the first such briefing since last year.

According to the Oct. 3 note entitled OPEC takes on the Fed Still, a potential cut by the alliance would be justified by the recent decline in crude prices, according to Goldman Sachs Group Inc.

A move by theOPEC to reduce output would lead to a setback for US President Joe Biden, who urged the group to add barrels to counter inflation ahead of midterm elections next month. It also suggests that efforts to isolate Moscow for its invasion of Ukraine aren't working as well as the administration would like.

The prospect of less supply from the alliance has helped to widen major market timespreads, indicating an expectation for tighter conditions. Americans are moving to cheaper places because of the rise in home prices.