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Oil prices jump 3% ahead of OPEC+ meeting to discuss supply cuts

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  • Brent crude gains $2.73 to $91.59 a barrel. 
  • Oil rises on prospect of big crude output cut.
  • Weakening US dollar boosts oil.

NEW YORK: Oil prices rose by 3% on Tuesday on expectations of a large cut in crude output from the OPEC+ producer group, and support from a weaker US dollar.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, look set to cut output when they meet on Wednesday. The move would squeeze supply in an oil market that energy company executives and analysts say is already tight due to healthy demand, a lack of investment and supply problems.

Brent crude gained $2.73, or 3.1%, to $91.59 a barrel at 1:35 p.m. EDT (1735 GMT). US West Texas Intermediate (WTI) crude was up $2.76, or 3.3%, to $86.39.

Sources from the group have said OPEC+, which includes Russia, is discussing output cuts in excess of one million barrels per day (bpd). Oil extended gains after Bloomberg reported that OPEC+ was considering a two million bpd cut.

“We expect a substantial cut to be made, which will not only help to tighten the physical fundamentals but sends an important signal to the market,” Fitch Solutions said in a note.

Kuwait’s oil minister said OPEC+ would make a suitable decision to guarantee energy supply and to serve the interests of producers and consumers.

Production target

OPEC+ has boosted output this year after record cuts put in place in 2020 when the pandemic slashed demand.

In recent months, the group has failed to meet its planned output increases, missing in August by 3.6 million bpd.

The production target cut being considered is justified by the sharp decline in oil prices from recent highs, said Goldman Sachs, adding that this reinforced its bullish outlook on oil.

Also boosting oil prices, the US dollar was headed for a fifth daily loss against a basket of currencies as investors speculated that the US Federal Reserve might slow its interest rate hikes.

“There’s no doubt that there’s underlying support from a weak dollar and the potential for a Fed pivot,” said Bob Yawger, director of energy futures at Mizuho in New York.

Meanwhile, a senior US Treasury official said G7 sanctions on Russia will be implemented in three phases, first targeting Russian oil, then diesel and then lower-value products such as naphtha.

Sanctions from the G7 and the European Union, which is opting for a two-phase ban, are set to begin on December 5.

Swiss lender UBS said it sees several factors that could send crude prices higher toward year-end, including “recovering Chinese demand, OPEC+ further supply cut, the end of the US Strategic Petroleum Reserve (SPR) release and the upcoming EU ban on Russian crude exports”.

Top oil traders also said at the Argus European Crude Conference in Geneva on Tuesday that economic headwinds have not yet caused significant erosion of global oil demand.

US crude oil stocks were estimated to have increased by about 2 million barrels in the week to Sept. 30, a preliminary Reuters poll showed on Monday.

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Gold prices in Pakistan see record increase

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Pakistan’s gold prices surged by an astounding Rs3,500 on Saturday. The cost of 24-karat gold increased to Rs220,300 per tola as a result of this increase in gold prices across the nation.

The price of 10 grammes of 24-karat gold increased correspondingly, according to dealers, by a significant Rs3,001, to trade at Rs188,872. In a similar vein, 10 grammes of 22-karat gold experienced an increase in price, trading at Rs173,132.

These oscillations have a strong correlation with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates. This emphasises how local gold prices are impacted by events related to the global economy.

Additionally, the price of 24-karat silver increased by a record Rs30 to trade at Rs2,600. The price of gold increased significantly on a global scale as well, by $36, to $2,103 per ounce.

It’s important to understand that fluctuations in the worldwide market can cause considerable fluctuations in gold rates in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information on gold prices.

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The gold price in Pakistan today

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According to the All Sindh Sarafa Jewellers Association, the price of 10 grammes of 24 karat gold increased by Rs772 to Rs184,928 from Rs184,156, while the price of 10 grammes of 22 carat gold increased to Rs169,517 from Rs168,810.

These oscillations are strongly correlated with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates.

This emphasises how local gold prices are impacted by events related to the global economy.

On the other hand, the cost of 24-karat silver was constant at Rs 2,570. Globally, too, the price of gold increased somewhat by $9 to $2,057 per ounce.

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Pakistan receives a $2 billion loan from China, according to the finance minister

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The $2 billion loan was one year ahead of schedule and became due in March. According to reports, Beijing had informed Islamabad of the decision.

The International Monetary Fund granted Pakistan’s cash-strapped economy a $3 billion standby arrangement last summer, but the country is still battling to recover from the financial crisis.

According to ratings firm Fitch, one of the top concerns confronting the next administration would be obtaining funding from bilateral and multilateral partners due to Pakistan’s precarious foreign situation, as was stated last week.

This event occurs one month after Anwaar-ul-Haq Kakar, the acting prime minister, asked for a $2 billion loan to be rolled over for a year in a letter to his Chinese counterpart.

In his letter, Kakar also expressed gratitude for China’s efforts to lessen Pakistan’s load

of foreign payments.

It is to be noted that Pakistan acquired safe deposits of $4 billion from China to address the balance of payments issue.

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