Oil ends mixed as U.S. data, OPEC uncertainty hold back market bulls

By Barani Krishnan

Investing.com -- Oil prices settled mixed on Thursday as troubling U.S. manufacturing data and uncertainty over OPEC+’s next course of action restrained a market that jumped almost three times as much earlier in the day, chasing the previous session’s rally.

A Reuters report that European Union governments have tentatively agreed to $60 a barrel as the price cap on Russian seaborne oil also proved a dampener for oil bulls. The proposed cap, with an adjustment mechanism to keep it at 5% below the market price of oil, is still higher than many expected, narrowing the chance of Russian retaliation in the form of reduced production or exports.

New York-traded West Texas Intermediate, or WTI, crude for January delivery settled at $81.22 per barrel, up 67 cents, or 0.8%, on the day. WTI jumped almost $2.80 at the session highs, reaching $83.33, as oil bulls attempted to reprise Wednesday’s 3% rally. The U.S. crude benchmark is up almost 7% on the week, after an accumulated drop of 19% over three prior weeks.

London-traded Brent crude for February settled at $86.88 per barrel, down 9 cents on the day. Notwithstanding Thursday’s slide, the global crude benchmark is up 4% on the week, after a drop of about 16% over three previous weeks.

Oil and other risk assets, including stocks on Wall Street, were hobbled by the ISM U.S. manufacturing index’s drop below the key 50 point level, a first in almost 2-½ years.

Uncertainty over what OPEC+ will do at its meeting this week also kept some risk off the oil market.

OPEC+ — which groups the Saudi-led 13-nation OPEC, or Organization of the Petroleum Exporting Countries, with 10 oil producing allies steered by Russia already has in place an agreement to cut production by 2 million barrels per day till end of next year to boost crude prices, which have fallen some 40% from their March highs.

Last week, Saudi Energy Minister Abdulaziz bin Salman indicated that the alliance will likely add to cuts when it meets this coming weekend.

But various other officials of the oil producing alliance have privately told media that OPEC+ will likely stand pat on production at Sunday’s meeting.