- Oil set to post a weekly gain ahead of the OPEC+ meeting and the EU’s ban on Russian oil
- WTI trades above $80/Bbl amid concerns about tighter supply and a weaker dollar
- OPEC+ is scheduled to meet on Sunday and is widely expected to maintain its current production level
- It'd be bullish for oil if OPEC+ decides to cut production, as it would coincide with the EU's ban on Russian oil (Dec 5)
- Additionally, China hinted at easing its strict Covid-zero policy, a sign of higher demand should China fully reopen
- A $60/Bbl price cap on Russian crude was tentatively agreed upon by the EU yesterday ahead of the deadline on Monday, although Poland still has not confirmed the agreement
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of other international currencies) fell to its lowest in five months this morning
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- The EU closed in toward a $60/Bbl price cap for Russian crude yesterday after some nations objected to levels around $62-$70/Bbl (BBG)
- Poland continues to be a hurdle to a unanimous agreement as they want new sanctions related to the cap, and sources said that talks would continue
- Additionally, the bloc is allegedly debating a mechanism that would allow regular evaluations and potential revisions of the cap every two months starting in mid-Jan 2023
- There should be agreement that any future adjustments to the cap should lower it by at least 5% from the average market rates, according to two sources
- The Urals grade fell to as low as $45.31/Bbl this week, which is still lower than the potential $60/Bbl cap, according to Argus
- The Biden administration is reportedly considering stopping crude sales from the SPR (BBG)
- The DOE intends to postpone or cancel the sale of 147 MMBbl of oil for the fiscal years 2024-2027
- “It doesn’t make sense for us to be releasing oil while we’re trying to refill the SPR”, said Doug MacIntyre, deputy director of the Office of Petroleum Reserves
- The proposal would need congressional approval and might be incorporated into a government funding bill that could come together this month