TOKYO SINGAPORE Oil rebounded on Tuesday after falling to more than 11 month lows in the previous session, as investors weighed a potential output adjustment from the major oil producers who are set to have a key meeting this week.
Brent crude futures advanced $1.81, or 2.2 per cent, and traded at $85.00 a barrel at 0446 GMT. U.S. West Texas Intermediate WTI crude futures rose $1.37, or 1.8 per cent, to $78.61 a barrel.
The previous day, Brent fell by more than 3 per cent to $80.61 after it fell to its lowest since Jan. 4. After touching its lowest since December 2021, the WTI was up 1.3 per cent on Monday.
The price jump was further fueled by the fact that the market is already correcting itself after a sharp drop, but the OPEC will seriously consider additional production cuts at the upcoming meetings, according to analysts from Haitong Futures.
The near-term market sentiment and the turning point of oil prices are likely to be the turning point of the future, they said, despite the fact that this is a guess not the official statement from the OPEC.
The Organization of the Petroleum Exporting Countries OPEC and allies, including Russia, are set to hold a meeting on December 4. In a note on Monday, analysts at the Eurasia Group suggested that weakened demand out of China could spur OPEC to cut output.
In November, OPEC was lowering its output target by 2 million barrels per day bpd, in order to shore up oil prices.
Despite a drop in COVID 19 cases on Monday, the market was under pressure due to the fear of demand destruction in China.
In Asia, bearish moods toward oil prices are due to concerns about a decline in China's demand, while rare protests over the weekend also raised fears for the Chinese economy, according to Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
The rare street protests that erupted over the weekend were a vote against President Xi Jinping's zero-COVID policy and the strongest public defiance during his political career, China analysts said. Even though most of the world has lifted most restrictions, Beijing stuck with the zero-COVID policy.
Markets are assessing the impact of an upcoming Western price cap on Russian oil.
A group of Seven G 7 and European Union diplomats have been talking about a cap between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow's military offensive in Ukraine, without disrupting global oil markets. Russia calls its actions in Ukraine a special operation, but EU governments didn't agree on Monday's cap, with Poland insisting that the cap should be set lower than proposed by the G 7, diplomats said.
The EU ban on Russian crude is due to take effect on December 5, and the price cap is due to come into effect on December 5.