Oil set for weekly gain as OPEC+ considers output cut

[September 30, 2022]  By Rowena Edwards

LONDON (Reuters) - Oil prices were on track for their first weekly gain in five on Friday, underpinned by a weaker dollar and the possibility that OPEC+ will agree to cut crude output when it meets on Oct. 5.

Brent crude futures for November, which expire on Friday, rose by 95 cents, or 1.07%, to $89.44 a barrel by 0948 GMT. The more active December contract was up 81 cents at $87.99.

U.S. West Texas Intermediate (WTI) crude futures rose 72 cents, or 0.89%, to $81.95.

Brent and WTI contracts rose by more than $1 earlier in the session and are poised for a weekly gain of about 4%. It would be the first weekly rise since August and follow nine-month lows hit earlier in the week.

Oil prices were shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity.

Analysts also expect buying to lift as Russia prepares to annex four Ukrainian regions to Russia on Friday in a move that could force the United States to strengthen sanctions against Russia.

A 3D-printed oil pump jack is seen in front of the OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo

The market has received fresh support from the prospect of the Organization of the Petroleum Exporting Countries (OPEC)and its allies cutting production quotas at its Oct. 5 meeting.

Analysts expect a production cut because demand fears linked to a possible global economic slowdown and rising interest rates have weighed on crude prices.

Brent and WTI prices are likely to finish the third quarter with a chunky 23% decline.

"The producer group has lost control over the oil market in recent weeks and will want to reassert its influence," said Stephen Brennock of oil broker PVM, adding that OPEC+ leadership will want to safeguard a price floor of $90 a barrel.

"Expect oil prices to receive a supportive kick up the backside next week," Brennock said.

(Reporting by Rowena Edwards; Additional reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by David Goodman)

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