Oil & Gas News

Oil Slumps After Report On UAE Leaving OPEC

UAE, OPEC, crude

By: Reuters – Oil prices slumped on Friday after the Wall Street Journal reported that the United Arab Emirates had an internal debate about leaving the Organization of the Petroleum Exporting Countries and pumping more oil.

Brent crude futures fell $1.57, or 1.8%, to $83.18 a barrel by 1412 GMT. U.S. West Texas Intermediate (WTI) crude futures were down $1.52, or 1.9%, at $76.64.

Oil prices this week had been boosted by strong Chinese economic data, underpinning hopes for oil demand growth, but those gains were all but erased on Friday.

“The driver was the WSJ story, with concerns that this might impact the OPEC+ production (cut) deal. The UAE and Saudi Arabia are the two countries with significant spare capacity,” said UBS analyst Giovanni Staunovo.

In China, activity in the services sector expanded at the fastest pace in six months in February as the removal of tough COVID-19 restrictions revived demand, a private sector survey showed on Friday.

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Manufacturing activity in China also grew last month, at the fastest pace in more than a decade, reinforcing expectations of a fuel demand recovery. China’s seaborne imports of Russian oil are set to hit a record high this month.

The world’s top oil importer is becoming increasingly ambitious with its 2023 growth target, aiming as high as 6%, sources involved in policy discussions told Reuters this week.

“Those betting on higher oil prices are basking in the afterglow of the positive macro data out of China,” said PVM analyst Stephen Brennock.

The market broadly shrugged off a 10th consecutive week of crude stock builds (USOILC=ECI) in the United States, as record exports of U.S. crude made for a smaller increase than in recent weeks.

Russia’s plan to deepen oil export cuts in March also helped to buoy prices.

Meanwhile, analysts polled by Reuters expect the dollar to weaken in the next 12 months, which would make dollar-denominated oil cheaper for holders of other currencies. ,

On the central bank front, hawkish signals continue to emanate from the European Central Bank, with Governing Council member Pierre Wunsch saying its key interest rate could climb as high as 4% if underlying inflation remains high.

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