An oil production cut by the Organization of the Petroleum Exporting Countries and allies is vital to break the negative momentum in prices amid recession fears and a stronger dollar, analysts at UBS said on Tuesday, APA-Economics reports citing the Financial Post.
“A lack of action by the group to remove barrels from the market is likely to spur further downside pressure on oil prices,” UBS said in a note.
“The group has to announce a production cut of at least 0.5 million barrels per day over the coming days.”
The Organization of the Petroleum Exporting Countries, Russia, and other producers known as OPEC+ is scheduled to meet next on Oct. 5.
Crude is falling on fears that a recession will lead to weaker demand and a better-supplied oil market, UBS said, adding that the broader risk-off environment caused by aggressive monetary policy tightening in the United States and Europe was also weighing on prices.
Oil prices rose more than 1% on Tuesday, after plunging to nine-month lows a day earlier, amid indications that producer alliance OPEC+ may enact output cuts to avoid a further collapse in prices.