Oil set for worst week this year as traders watch for OPEC+ move

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(Bloomberg) — Oil is headed for its biggest weekly loss this year after banking turmoil rocked global markets, with investors watching for a possible response from OPEC and its allies.

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West Texas Intermediate futures edged up to $69 a barrel on Friday, but are still down 10% for the week. OPEC+ chiefs Saudi Arabia and Russia met in Riyadh on Thursday and discussed efforts by the group to “promote market balance and stability”. The cartel’s monitoring committee, which could recommend production changes, is due to meet on April 3.

According to industry consultant FGE, OPEC+ will sit tight and watch the market until Brent falls below $70 a barrel for a sustained period, while Energy Aspects Ltd said the producer group was unsure whether to react. Will wait for the financial markets to calm down before taking a decision.

Credit Suisse Group AG’s woes combined with options to take oil to its lowest level in 15 months this week. While markets are beginning to see some stability, investors will also be watching to see whether the Federal will raise interest rates again next week following the turmoil.

“External factors continue to dictate price action for oil,” said Warren Patterson, head of commodity strategy at ING Groupe NV. “The scale of the selloff in oil will be a concern for OPEC+, but they are unlikely to act quickly, instead they will probably wait for the dust to settle.”

With OPEC this week predicting a modest surplus in the second quarter, with a typical period of soft demand ahead of summer, oil may struggle to post strong gains in the near term. The International Energy Agency also said the market was already in a surplus on stubborn Russian production.

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