0235 GMT: Crude oil futures edged lower in mid-morning trade in Asia Oct. 4 as the market looked for direction ahead of the OPEC+ meeting scheduled for later in the day.
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At 10:35 am Singapore time (0235 GMT), the ICE December Brent futures contract was down 24 cents/b (0.30%) from the previous close at $79.04/b, while the NYMEX November light sweet crude contract was 27 cents/b (0.36%) lower at $74.67/b.
"Plenty of volatility is expected to be seen, not just because of the upcoming OPEC+ meeting, but also the festering energy crisis in Europe and China," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts Oct. 4, adding that challenges in assessing the impact on oil demand was also a contributing factor.
Market focus on the OPEC+ meeting is on whether the alliance will increase output further than the already scheduled 400,000 b/d rise each month as supply disruptions and recovering demand push oil to near $80/b.
With China reportedly in search of more supplies and US production still hobbled, OPEC+ has ample reasons to consider pumping beyond its current limit.
UOB market researcher in an Oct. 4 note said the group was slowly unwinding record output cuts made last year, with the market watching to see it will do more in terms of restoring output against the rise in crude oil prices.
Amid speculation of a production increase, the oil market remains supported by the strength in natural gas prices, which are raising the attractiveness of fuel alternatives that in turn boost oil demand.
"Shortfalls in LNG and thermal coal could see industries revert to oil products such as fuel oil, diesel and propane for their energy requirements," ANZ research analysts said in a note Oct. 4.
Chinese authorities have reportedly ordered state-owned energy companies to build and ensure adequate reserves in order to secure supplies for winter at any costs as it battles an energy crisis.
Market watchers said that if China's state-owned energy companies have indeed been instructed to do "whatever it takes" to secure winter energy supplies, it is unlikely that oil prices could fall very far, even if most China buying occurs in the natural gas and coal markets.