Oil’s rough week ends with rebound over Opec+ risk

Bloomberg

Oil rises, paring a hefty weekly decline, as Opec ministers and allies prepare to discuss crude output.
West Texas Intermediate futures climbed above $88 a barrel on Friday after slumping almost 11% over the prior three days. Traders shrugged off an announcement by G-7 leaders of plans to cap the price of Russian crude in retaliation for Vladimir Putin’s aggression in Ukraine.
The G-7 move is largely symbolic “as the Russians are proving capable of circumventing restrictions already imposed by the G-7 countries, and hitting a record high export volume in August despite sanctions,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients.
The bullish sentiment was bolstered by a setback in negotiations over Iran’s nuclear program after the US State Department said the Islamic Republic’s latest response was “not constructive.” The talks are being closely watched by oil traders because any deal to relax sanctions could allow more Iranian crude to flow into markets.
Earlier in the week, oil came under pressure as tighter monetary policy and renewed anti-virus lockdowns in China spurred demand concerns.
Oil falls by more than 20% in the three months through August, erasing all of the gains since Russia’s late-February
invasion of Ukraine.
The price retreat poses a challenge for the Organisation of Petroleum Exporting Countries and its allies, with ministers due to meet on Monday to plan output policy. While Opec-watchers expect the group to keep supplies steady, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman raised the possibility of a production cut in remarks last week.
Widely-watched time spreads, an indicator of market tightness, have been volatile. Brent’s prompt spread — the difference between its nearest two contracts — was $1.25 a barrel in a backwardation, compared with almost $2 a barrel at the end of last week and 63 cents two weeks ago.