Oil prices increased on Monday following a decision by OPEC+ countries to extend production cuts and delay output increases, with additional support from anticipation around the upcoming US presidential elections.
Tribune Online reports that US Vice President and Democratic candidate, Kamala Harris and Republican candidate Donald Trump are neck to neck in the race for the White House.
The international oil benchmark, Brent crude, increased 2.2% to $74.42 per barrel up from the previous session’s close of $72.84. The US benchmark, West Texas Intermediate, also rose by 2.4% to $70.77 per barrel, compared to $69.10 at the prior session’s close.
The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, announced on Sunday a decision to continue production cuts of 2.2 million barrels per day through December.
The group was expected to increase production by 180,000 barrels daily from December. The reduction in oil supply by major producers supported prices upwards.
Moreover, the dollar index declined ahead of the November 5 presidential elections in the US, the world’s largest oil-consuming country. The weakening of the US dollar against other major currencies contributed to higher oil prices.
The weaker dollar is likely to drive up demand by making oil more affordable for buyers using other currencies. The US dollar index, which tracks the dollar’s value against a basket of other currencies, dropped 0.54% to 103.637.
Meanwhile, market players are also monitoring the US Federal Reserve’s (Fed) interest rate decision scheduled on Thursday.
According to the analysts, the expectations for the Fed’s interest rate cuts remain strong, while pricing in the money markets is certain that the bank will cut the policy rate by 25 basis points at next week’s meeting. A December Fed rate cut is heavily implied, with a 78% probability priced into the market.
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