Oil Bulls Ride OPEC+ Wave to Push Brent Near $100 a Barrel

Oil bulls near to $100

Oil bulls near to $100

Crude prices rose 4% on Friday as rising oil prices eroded gains from a four-month sell-off that piled back on the market following the production cuts OPEC announced this week.

With Brent back at $100 a barrel in what appears to be the first item on their clipboard, the bulls are pushing long and hard and are close to hitting their target. The global benchmark for crude broke above $98 for the first time since Aug. 31 and is up 12% this week.

West Texas Intermediate, the US crude benchmark, posted an even more impressive 17% gain this week after breaking above $90 for the first time since July 24.

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“OPEC+ has done what it took and is now waiting to see how world leaders will react,” said Ed Moya, an analyst at online trading platform OANDA.

At the very least, the US government’s “reaction” could be to limit the amount of fuel that can be exported outside the United States — in a bid to keep gasoline prices from hitting a mid-June high of $5 a gallon. Gasoline prices at US gas stations on Friday averaged around $3.80 a gallon.

OPEC+, which brings together 13 members of the Saudi-led Organization of the Petroleum Exporting Countries and 10 Russian-led oil exporters, announced what it called a “deep” production cut of 2 million barrels per day on Wednesday.

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But that number is well below the 3.5 million BPD shortfall in the group’s previously announced production target.

Phil Flynn’s View

However, Phil Flynn, an energy analyst at Price Futures Group and a well-known oil bull, said there was justification for the market rally beyond the OPEC+ decision. “Crude inventories are 3% below their five-year average,” Flynn added.

US Jobs Data

Employers in the US added 263,000 jobs in September, slightly above economists’ expectations, while the unemployment rate fell to 3.5% from 3.7% in August, posing ongoing challenges to the Federal Reserve’s fight against inflation, data shows.

US Dollar Index

The dollar index rose for a third straight day on Friday as long positions in the currency attempted to recapture 20-year highs set a week ago.

A strong dollar is the destruction of dollar-denominated commodities, including crude oil, as it increases transaction/acquisition costs for commodity traders using the euro and other currencies.

Oil bulls near to $100