Oil near 3-year high ahead of Opec meet

Oil settled above $78 a barrel on Friday, just shy of a three-year high reached earlier this week, on expectations that Opec ministers will maintain a steady pace in raising supply.

The Organization of the Petroleum Exporting Countries and allies, known as Opec, meets on Monday. The group is slowly unwinding record output cuts made last year, although sources say it is considering doing more to boost production.

Brent crude rose 97 cents, or 1.2 per cent, to settle at $79.28 in its fourth weekly rise. US West Texas Intermediate (WTI) rose 85 cents to settle at $75.88 in a sixth week of gains.

Brent has risen over 50 per cent this year and reached a three-year high of $80.75 on Tuesday.

Opec is facing pressure from consumers such as the US and India to produce more to help reduce prices as demand has recovered faster than anticipated in some parts of the world.

Further gains likely

“If Opec sticks to the script and only delivers the planned 400,000 bpd increase in November, energy markets will shortly be seeing $90 oil prices,” said Edward Moya, senior market analyst at OANDA, adding that any increase smaller than 600,000 barrels should boost prices.

Oil is also finding support as a surge in natural gas prices globally prompts power producers to move away from gas.

Generators in Pakistan, Bangladesh and the Middle East have started switching fuels. “The most likely reason for stable oil prices is that investors believe the supply-demand gap will widen as the power crisis worsens,” said Naeem Aslam, analyst at Avatrade.

US energy firms this week added oil and natural gas rigs for a fourth week in a row as more storm-hit offshore units resumed service in the Gulf of Mexico.

Rigs rose by 7 to 528 in the week to October 1, the highest since April 2020.