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Oil prices plunge after Saudi Arabia denies reports of OPEC supply increase

Oil prices closed slightly lower on Monday in a volatile session, plunging and then rebounding after Saudi Arabia “unequivocally” dismissed a report that Opec was considering raising output to compensate. offset the decline in Russian crude oil supplies.

Brent crude, the international benchmark, was down 0.2% at $87.45. The West Texas Intermediate, the US marker, settled 0.4% lower at $79.73.

The price of each previous benchmark fell as much as 6%, reaching its lowest level on an intraday basis since January, after The Wall Street Journal report that Saudi Arabia and other Opec producers are discussing increasing production by up to 500,000 barrels per day when they meet in Vienna on December 4.

Saudi Arabia, the group’s de facto leader, later said it was “well aware” that the group had not discussed “any decisions prior to its meetings” in a denial that prompted the market to disapprove. the oil market reversed most of their losses.

Any output increase would ease the market after the Opec+ group, which includes the group and allies like Russia, said in October that it was cutting its production target of 2 million bpd to support prices – a move that angered Washington, accusing the group of “aligning” with Russia and damaging the global economy.

It will also come a day before the EU is set to introduce an embargo on Russian oil shipments and the G7 countries plan to limit the price of Russian crude.

“Opec+’s current 2 million bpd cuts will continue until the end of 2023 and if further measures by reducing production are needed to balance supply and demand, we are always ready to intervene. ,” Saudi Energy Minister, Prince Abdulaziz bin Salman, said in a statement.

The IEA has warned that these major market interventions can create great uncertainty over price direction.

Helima Croft, an analyst at RBC Capital Markets, said the Saudi ministry’s strong denial and suggestion that further cuts are not entirely unexpected “will give market participants pause. predicting a policy reversal at the next meeting.” “We see a high probability of a decision to ‘stay the course’ until there is clear evidence of real Russian supply disruptions.”

On the stock market, Wall Street’s benchmark S&P 500 closed 0.4% lower, while the tech-heavy Nasdaq Composite added 1.1%.

In Europe, the Stoxx Europe 600 region fell 0.1% and London’s FTSE 100 gave up gains to trade down 0.1%.

The US Dollar Index, which tracks the coin against six other currencies, gained 0.8% on Monday, extending last week’s rally, although the greenback is still down about 3% on the month. 11.

Speculation that the greenback could peak at the end of September has been fueled by lower-than-expected US inflation figures for October and hopes that China may be about to ease its Covid-free stance. .

However, investors were less optimistic this weekend, after the provincial capitals of Shijiazhuang and Guangzhou implemented stricter Covid control measures to limit cases. Hong Kong CEO John Lee, meanwhile, positive test just days after meeting with President Xi Jinping at the Asia-Pacific Economic Cooperation forum in Bangkok.

“The protest reopens [in China] played too quickly, that won’t happen until the second quarter [of 2023] at least,” said Paul O’Connor, head of UK-based multi-asset group Janus Henderson. “China has been an important catalyst for the rallies of the past few weeks, but investors are questioning whether they are too optimistic.”

Hong Kong’s Hang Seng index fell 1.9%, while China’s CSI 300 index fell 0.9%. Elsewhere, Japan’s Topix rose 0.3% and South Korea’s Kospi fell 1%.



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