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Monday, November 29, 2021

Oil Weakens, Attention to OPEC + Response to US-Led Oil Release

MELBOURNE / SINGAPORE – Oil prices fell on Thursday and investors are waiting to see how major producers respond to an emergency release from major consumer countries to cool the market, even as data points to healthy fuel demand in the US …

Brent crude oil futures fell 7 cents to $ 82.18 a barrel at 07:26 GMT after falling 6 cents on Wednesday.

WTI (West Texas, US) crude oil futures fell 19 cents, or 0.2 percent, to $ 78.20 a barrel, increasing 11 cents on Wednesday.

“The release of oil from strategic reserves is intensifying competition for control over the oil market among the world’s largest producers,” analysts at ANZ say.

“We do not expect OPEC to be idle when the market enters a critical period.”

All eyes are now on the Organization of the Petroleum Exporting Countries, Russia and its allies, collectively known as OPEC +, who are due to meet next week to discuss oil supply and demand.

“A bold move by oil importers has opened the doors wide for OPEC + to adjust its supply policy downward at the next (meeting) on ​​December 2, 2021,” Rystad Energy analyst Louise Dixon said in an email commentary.

The group has increased supply by 400,000 barrels a day since August, canceling record production cuts made last year when the pandemic limited demand. OPEC + will meet on December 1-2 to decide if it will increase production by another 400,000 bpd in January.

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As the state news agency WAM reported Thursday, the United Arab Emirates is fully committed to the OPEC + agreement and does not have a “preliminary position” before meeting next week.

High oil prices have exacerbated inflationary concerns. A coordinated release from state oil reserves led by the United States could add 70 to 80 million barrels of crude to markets, Goldman Sachs analysts said.

However, ANZ said the release of 70 million barrels of oil reserves could push the market into surplus. The bank expects OPEC + to suspend its planned plan to increase supplies in January, which could shield markets from headwinds and keep Brent at $ 80 a barrel.

The US Department of Energy has announced an auction for the sale of 32 million barrels of Strategic Oil Reserves (SPR) for delivery between late December and April 2022. In the near future, it plans to produce another 18 million barrels.

Traders are also monitoring whether China will follow through with plans to free oil from its reserves.

Analysts said data from the US Energy Information Administration on Wednesday showed that inventories of gasoline and distillates fell more-than-expected, even as crude oil inventories rose, indicating the market needs more oil.

“But the overall picture is that product demand remains healthy, adding to the pressure on a tightening market,” Capital Economics economist Kieran Tompkins said in a note.

By Sonali Paul and Florence Tan

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World Nation News Deskhttps://www.worldnationnews.com
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