LONDON — Oil futures ticked higher on Friday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday and an EU ban from Monday on Russian crude.
Brent crude futures were up 65 cents, or 0.8%, at $87.53 per barrel by 1252 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 69 cents, or 0.9%, to $81.91 per barrel.
Both Brent and WTI had dipped earlier, but were on track for their first weekly gains, the biggest in two months at around 4.5% and 7% respectively, after three consecutive weeks of decline.
Sending bullish signals, China is set to announce an easing of its COVID-19 quarantine protocols within days, sources told Reuters, which would be a major shift in policy in the world’s second biggest oil consumer, although analysts warn a significant economic reopening is likely to be months away.
Also underpinning oil prices, the U.S. dollar, which typically trades inversely with oil, hit five-month lows.
Meanwhile, European Union governments tentatively agreed on a $60 a barrel price cap on Russian seaborne oil with an adjustment mechanism to keep the cap at 5% below the market price, according to diplomats and a document seen by Reuters.
This still needs formal approval before the bloc’s sanctions on Russian crude kick in on Dec. 5. Russian Urals crude
Poland, which had pushed for the cap to be as low as possible, had not confirmed that it would support the deal, an EU diplomat said.
OPEC+ is widely expected to stick to its latest target of reducing oil production by 2 million barrels per day (bpd) when it meets on Sunday, but some analysts believe that crude prices could fall if the group does not make further cuts.
“This week’s price rebound has taken Brent to within touching distance of the $90/bbl threshold and may temper appetite among (OPEC+’s) leadership for fresh price-supportive cuts,” said PVM analyst Stephen Brennock.
“That being said, the prospect of subdued Chinese oil demand and more U.S. (strategic petroleum reserve) releases could prompt pre-emptive action by the alliance. Either way, the ingredients are there for price fireworks come Monday morning.” (Additional reporting by Mohi Narayan in New Delhi; Editing by Kim Coghill and Alexander Smith)