This week’s focus is on the U.S. election and China’s NPC meeting. Oil prices extended gains on Monday, rising more than $1 after OPEC+ decided to delay plans to increase output by a month. The market prepares for a week that includes the U.S. presidential election and a key meeting in China.
Brent futures rose $1.39 a barrel, or 1.9%, to $74.49 a barrel by 0722 GMT. WTI crude rose $1.41 a barrel, or 2.0%, to $70.90 a barrel.
On Sunday, OPEC+ said it would extend its December output cut of 2.2 million barrels per day (bpd) by a month, delaying the increase due to falling prices and weak demand.
The group had planned to increase production by 180,000 bpd from December. The delay ran counter to expectations among some in the market that OPEC+ would deliver on its planned output increase.
While the delay until January does not significantly change the fundamentals, it could potentially prompt the market to rethink its OPEC+ strategy. This delayed supply increase means the group is more willing to support prices than many think.
The group is set to gradually withdraw the 2.2 million bpd daily cut in the coming months, while the 3.66 million bpd daily cut will continue until the end of 2025.
Brent and WTI posted weekly declines of around 4% and 3% respectively last week as record U.S. production weighed on prices. But both contracts rose on Friday on reports that Iran could soon launch a retaliatory strike on Israel.
Whether the upward trend will continue is questionable as the previous positive response to the delayed output increases and geopolitical tensions fade.
For now, oil prices are likely to remain in a broad consolidation range, with any rally likely to face resistance at $78.50.
Markets are looking ahead to Tuesday’s U.S. presidential election, with polls showing Democratic Vice President Kamala Harris and Republican former President Donald Trump neck and neck.
And on Thursday, economists expect the U.S. Federal Reserve to cut interest rates by 25 basis points.
In China, the National People’s Congress Standing Committee meets from Monday to Friday and is expected to approve additional stimulus to boost the slowing economy, but analysts say much of it could go toward reducing local government debt.
