The volatility of international oil prices, which greatly influence inflation, has recently increased. After falling nearly 5% the previous day due to concerns over declining crude oil demand, international oil prices rebounded more than 4% on the same day amid expectations of additional production cuts by oil-producing countries such as Saudi Arabia.
The International Finance Center stated on the 18th, "The price of West Texas Intermediate (WTI) crude oil rose 4.1% to $75.89 per barrel compared to the previous day," adding, "The recent sharp decline in oil prices has highlighted the possibility of additional measures being taken at the OPEC Plus (+) meeting scheduled for the 26th."
According to the New York Mercantile Exchange, the December delivery WTI price closed at $75.89 per barrel, up $2.99 (4.10%) from the previous day. WTI had recently been declining due to concerns over a global slowdown in crude oil demand, dropping sharply by $3.7 (-4.81%) the previous day, but it rebounded on this day.
Reports that OPEC and non-OPEC major oil-producing countries' coalition, OPEC+, may implement additional production cuts have been interpreted as increasing concerns over supply shocks. On the same day, the Financial Times reported, citing sources, that Saudi Arabia plans to extend oil production cuts through next year.
According to the International Finance Center, JP Morgan and Saxo Bank stated, "Previously, when oil prices approached $75 per barrel, it triggered a response from OPEC+," and "Given the expected weak crude oil demand in the first half of next year, an expansion of production cuts is anticipated, with a possibility of pursuing joint cuts rather than Saudi Arabia acting alone."
Although oil prices rose on this day, on a weekly basis, WTI prices fell more than 1%, marking the fourth consecutive week of decline since mid-October. Compared to the peak at the end of September, prices have dropped nearly 20%.
Going forward, oil prices are expected to fluctuate between declining crude oil demand and supply shocks.
Tyler Rich, co-editor of Sevens Report Research, explained, "This time, by cutting OPEC+ production targets further, futures prices could return to the $100 range, shifting the risk toward a bullish trend."
On the other hand, CIBC forecasted, "With sufficient crude oil supply and a slowdown in the U.S. economy weakening crude oil demand further, prices could fall to $70 per barrel, making it difficult to recover the previous high of $90."
Bloomberg also explained, "The number of U.S. oil rigs recorded the largest increase since February this year," suggesting that record U.S. crude oil production may continue.
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