OPEC and other major producers are said to be discussing a massive cut in crude output to support prices, which have tumbed in recent months
Oil prices wobbled Wednesday as investors waited to learn the amount of an expected major cut in output by OPEC and Russia-led allies.
In equity action, a stocks rally that had been fuelled by hopes the US Federal Reserve could ease off rate hikes ran out of gas.
The pound, meanwhile, continued to suffer against the dollar over fears for Britain’s recession-threatened economy, losing around 1.6 percent to slide under $1.13.
In Vienna, ministers from the OPEC+ alliance gathered for their first in-person meeting since March 2020 to discuss a cut in oil production, a move that could anger the United States as nations battle energy-fuelled inflation.
“There will be a lot of attention on just how big this cut is,” said AJ Bell investment director Russ Mould.
“Speculation they could be double the volume previously flagged… has been behind the recent surge in crude.”
Crude prices have shot higher in recent days following reports that OPEC+ is considering a reduction of up to two million barrels per day.
But crude oil prices began to wobble as oil ministers began to meet, amid reports that US officials are lobbying Middle Eastern officials against making a big production cut that would boost inflation and increase risks of a global recession.
A White House official played down the reports.
“We are always talking to partners on supply meeting demand and OPEC+ meetings happen once every month like clock work,” the official told AFP on condition of anonymity.
Swissquote analyst Ipek Ozkardeskaya warned that a big cut could “backfire” on OPEC+ if investors fear that it will push inflation higher and force central banks to hike interest rates so much that it will trigger a recession.
“The higher the energy prices, the sharper the central banks must kill demand to pull the prices lower,” she said.
“Therefore, a big cut in OPEC production could well backfire, and trigger profit taking and fall in oil prices today,” she added.
– Rally loses steam –
In other markets, European stocks were down across the board in afternoon trading, and Wall Streets main indices opened lower.
Stocks had rallied after disappointing US data on Monday fuelled hopes that the US Federal Reserve could let up in its campaign of aggressive interest rate hikes to tame inflation.
“Market participants are being forced to contend with the possibility that the Fed won’t acquiesce to the stock market’s hopeful wishes,” said analyst Patrick O’Hare at Briefing.com.
“That is sapping some of the rebound momentum and feeding a reversal in other markets, too,” he added.
In a reminder of the global economic turmoil, the World Trade Organization dramatically lowered its global trade forecast for 2023.
“Today the global economy faces multi-prong crises. Monetary tightening is weighing on growth across much of the world,” WTO Director-General Ngozi Okonjo-Iweala told reporters in Geneva.
Presenting a revision of their annual trade forecast, WTO economists said they still anticipated global economic growth rising 2.8 percent this year.
– Key figures around 1330 GMT –
Brent North Sea crude: UP 0.8 percent at $92.55 per barrel
West Texas Intermediate: UP 0.7 percent at $87.12 per barrel
London – FTSE 100: DOWN 0.7 percent at 7,039.04 points
Frankfurt – DAX: DOWN 1.3 percent at 12,509.72
Paris – CAC 40: DOWN 1.0 percent at 5,977.64
EURO STOXX 50: DOWN 1.2 percent at 3,443.25
New York – Dow: DOWN 0.9 percent at 30,030.14
Tokyo – Nikkei 225: UP 0.5 percent at 27,120.53 (close)
Hong Kong – Hang Seng Index: UP 5.9 percent at 18,087.97 (close)
Shanghai – Composite: Closed for a holiday
Pound/dollar: DOWN at $1.1291 from $1.1477 on Tuesday
Euro/dollar: DOWN at $0.9880 from $0.9992
Euro/pound: UP at 87.49 pence from 87.03 pence
Dollar/yen: UP at 144.54 yen from 144.09 yen
burs-rl/lth
