Oil Futures Settle Roughly Flat
Oil futures settled slightly higher on Tuesday, due largely to the decision of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to cut output by 100,000 barrels per day in October.
Worries about outlook for energy demand amid rising fears of a recession, and the dollar’s uptick limited oil’s rise.
The dollar index climbed to a fresh 20-year high at 110.55 before paring some gains.
West Texas Intermediate Crude oil futures for October ended higher by about a penny or $0.09% at $86.88 a barrel.
The OPEC+ announced on Monday that they will slash oil production by 100,000 barrels per day (bpd) in October, roughly 0.1% of global demand, reflecting expectations of slower global economic growth.
OPEC+ leaders confirmed they can meet at any time, before a next agreed gathering on October 5, 2022, if production needs to be altered again.
Analysts see the OPEC output cut move as a largely symbolic one to stem the recent price slide because of recession fears.
Meanwhile, concerns about weak fuel demand have resurfaced after official data showed German factory orders declined 1.1% month-on-month in July, bigger than June’s revised 0.3% decrease. This was the biggest fall since April, when orders decreased 1.7 percent.
On a yearly basis, factory orders logged a sharp fall of 13.6% after easing 9% in June.
Europe’s energy crisis is deepening, raising concerns the crisis will push the both the eurozone and U.K. into recession.
Meanwhile, EU foreign policy chief Josep Borrell said he was less hopeful about reaching an agreement soon to revive a nuclear deal with Iran.
Extended COVID-19 lockdowns in certain parts of China have added to worries that high inflation and interest rate hikes will hit demand, although the Chinese central bank’s pledge to come out with various measures to boost the nation’s economy supported oil prices a bit.
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