Oil prices rose more than 1 per cent on Tuesday after declining to a nine-month low a day earlier, amid the hint that the Organization of the Petroleum Exporting Countries (Opec+) — the producer alliance — may go for output reductions to prevent further collapse in prices.
There were also indications of a possibility that the European Union may put a price cap on Russian oil.
During the last trading session, the prices of oil had dropped to the lowest levels under the pressure of a surging dollar that makes greenback-denominated crude oil more expensive for buyers using other currencies, and rising interest rates, which might trigger a recession and lower oil demand.
In the previous two trading sessions, Brent plunged 7.1 per cent while US West Texas Intermediate (WTI) crude slumped 8.1 per cent. Officials from major producers reacted to the past days of declines by indicating they may take action to keep price stability.
“Crude oil prices are showing signs of stabilising after the swift decline towards a nine-month low with markets considering the prospects of further action by the Opec+ members at their October 5 meeting, as the oil cartel hinted at their discomfort with declining crude prices,” said Sugandha Sachdeva, vice-president for commodity and currency research, Religare Broking.
She also said that softening of the dollar index and uncertainty over a price cap being imposed by the EU on Russian oil was also underpinning crude oil prices and that they foresee prices to witness recovery towards $80 a barrel for WTI while for Brent, prices look to rebound towards $87 a barrel.
Brent crude futures for November settlement rose $1.17, or 1.39 per cent, to $85.23 per barrel by 0644 Greenwich Mean Time (GMT). US WTI crude futures for November delivery were up $1.13 at $77.84 per barrel.
The US Federal Reserve’s rate hike brought on a strengthening dollar, with the dollar index, which measures the greenback against a basket of major currencies, climbing to a 20-year high on Monday.