Oil Futures Settle Sharply Higher As Traders Continue To Bet On Production Cuts

Crude oil prices rose sharply on Tuesday, extending gains from the previous session, with traders continuing to bet on hopes the OPEC+, which is scheduled to meet on Wednesday, will agree to a large cut in crude output.

The dollar’s continued weakness amid expectations the Fed might turn less aggressive with regard to interest rate hikes after data showed a bigger than expected drop in the pace of manufacturing activity in the U.S. last month.

Weak construction sector data, and a decline in U.S. job openings in the month of August also supported the speculation about rate hikes.

The dollar index dropped to 110.11 a little past noon and was last seen at 110.22, down nearly 1.4% from the previous close.

West Texas Intermediate Crude oil futures for November settled at $86.52 a barrel, up $2.89 or about 3.5 percent.

WTI crude futures shed as much as 5.2% on Monday.

Brent crude futures were up $2.75 or about 3.1% at $91.61 a barrel a little while ago.

According to reports in the media, the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are likely to consider cutting oil output by more than 1 million barrels a day, the biggest since the start of the pandemic, in response to a drastic fall in oil prices since the middle of the year.

Traders now look ahead to weekly crude inventory data from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). The API’s report is due later today, while EIA will release its oil stock data Wednesday morning.

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