Crude values set for first weekly gain in five weeks

Front-month ICE Brent has gained by $1.34/bbl on the day, to $89.61/bbl at 09.04 GMT.

PHOTO: Leading OPEC+ members have begun discussing an output cut ahead of their meeting on Wednesday next week, reports Reuters. Getty Images

Brent is headed for an 8% monthly decline in September, and has plunged 23% lower in the third quarter.

Upward pressure:

According to sources cited by Reuters, leading OPEC+ members have begun discussing an output cut ahead of their meeting on Wednesday next week. Reuters earlier reported that Russia is likely to propose an output cut of nearly 1 million b/d.

The market is also pricing in escalating tensions between Russia and the West after the EU suspected sabotage was behind this week's gas leaks from the Nord Stream gas pipelines in the Baltic Sea. IEA chief Fatih Birol pointed out that it was “very obvious” who was behind the alleged sabotage.

Downward pressure:

German inflation has hit double-digits for the first time since 1986 after consumer prices jumped 10.9% from a year ago in September, according to the German Federal Statistics Office.

Soaring inflation in Europe has prompted policymakers at the European Central Bank (ECB) to call for an aggressive interest rate hike. The Governor of the Bank of Finland, Olli Rehn, said the ECB needs to raise its interest rate by 75 or 50 basis points in October, while Lithuania's central bank chief, Gediminas Simkus, said he will likely choose 75, but "50 is minimum."

US jobless claims dropped to their lowest levels in five months supporting the case for a further rate hike by the Federal Reserve. Fed chair Jerome Powell described the labour market as "out of balance" in his commentary last week. Initial jobless claims declined to 193,000 in the week ending 24 September, according to the US Labor Department.

By Konica Bhatt

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