OIL FUTURES CLOSE 1.5% LOWER

OIL FUTURES slipped 1.5% in choppy trading on Friday ahead of a meeting of Opec+ yesterday and an EU ban on Russian crude today.

Brent crude futures settled down $1.31, a 1.5% drop, at $85.57 (about R1 496) a barrel.

US West Texas Intermediate (WTI) crude futures declined $1.24, or 1.5%, to $79.98 a barrel.

Both contracts dipped in and out of negative territory, but notched their first weekly gains at around 2.5% and 5%, respectively, after three consecutive weeks of drops.

Opec+ was 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.

“Crude carries significantly more weekend risk and could be extremely volatile on the open next week,” said Oanda analyst Craig Erlam, a view echoed by other analysts.

Russian oil output could decline by 500 000 to 1 million bpd early in 2023 due to the EU ban on seaborne imports from today, two sources at major Russian producers said.

Poland agreed to the EU’s deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to move forward with formally approving the deal over the weekend, Poland’s Ambassador to the EU, Andrzej Sados, said.

European Commission president Ursula von der Leyen said the Russian oil price cap would be adjustable over time so that the union can react to market developments.

Russian Urals crude traded at around $70 a barrel on Thursday afternoon. The cap was designed to limit revenues to Russia while not resulting in an oil price spike.

Sending bullish signals, China is set to announce an easing of its Covid19 quarantine protocols within days, sources said.