Oil prices gained momentum Tuesday, one day before the Organization of the Petroleum Exporting Countries and allies (OPEC+) meeting, where member countries are predicted to pass output cuts of up to one million barrels per day (bpd) to support prices.
Brent crude for December contracts was up by 2.7% to $91.32 a barrel as of 5:30 pm GST Tuesday, after settling at $88.86 a barrel the previous session.
US West Texas Intermediate (WTI) crude jumped 2.62% to $84.87 a barrel around the same time, following its settlement at $82.7 the previous session.
Both benchmarks experienced their fourth monthly decline and 23% fall during the last quarter. Brent hit its first quarterly loss since the fourth quarter of 2021, while WTI hit its first quarterly decline since the first quarter of 2020 when the pandemic first hit global energy demand with a 3.8% decline.
In addition to the prospects of an output cut, the increase in oil prices is underpinned by a drop in the US dollar after it jumped to a 20-year high last week due to the Federal Reserve hiking interest rates by 75 basis points on September 21. Consumers spend less to purchase dollar-denominated oil when the greenback is weak as it has an inverse relationship with the fuel.
In a bid to support oil prices, sources told Reuters last week that Russia would call for a one million bpd output cut in the next OPEC+ meeting in Vienna, Austria, following last month's cut of 100,000 bpd. However, since the organization is currently producing below its targeted output by 3.58 bpd in August, according to Reuters, any announced cut won't heavily affect supply.
