Oil Prices Edge Higher on Lack of OPEC+ Action
Oil prices continued to edge higher as the lack of Organisation of Petroleum Exporting Countries and allies (OPEC+) action last week, coupled with the Saudis raising their official selling prices for December crude loadings, has been positive for the market.
A weaker dollar has also proved supportive of the broader commodities complex, says ING Economics in a note. Given that OPEC+ ignored US calls to increase output more aggressively, the US will now be looking at what action they can take to ease price pressures.
Crude oil rose “strongly” on Friday amid signs of strong demand, a note issued by Australia’s ANZ Research on Monday stated, adding that Saudi Aramco raised its official selling price of crude to all buyers across the globe.
This comes following OPEC’s decision to stick with its scheduled 400,000 barrels per day increase in output despite consumers saying the current pace is too slow to sustain the post-COVID recovery, ANZ Research’s note added.
West Texas Intermediate crude oil futures were trading around 1.4% higher at $82.39 per barrel in recent, pre-market trade on Monday while Brent futures were 1.1% higher at $83.67 per barrel recently.
The US Secretary of Energy has said that President Biden may make an announcement this week to address high oil and gasoline prices, ING noted.
Saying the most obvious tool for the US administration to use is the Strategic Petroleum Reserve (SPR).
Outside of mandated and SPR modernization sales (and a test sale in 2014), the last sale was part of a coordinated IEA release back in June 2011, which saw 30.6MMbbls released.
“We have also seen the SPR used a number of times in recent years for exchanges and most recently this year following Hurricane Ida”, it added.
There have also previously been suggestions that the US could implement a ban on crude oil exports. While ING analysts expressed believe this is less likely, if such action was taken, it would lead to a widening in the WTI/Brent discount.
China National Petroleum Corp (CNPC) has said that it will stop refined product exports for the remainder of this year.
China has faced diesel shortages recently, which also saw the government announce a stock release of both diesel and gasoline.
Chinese exports of refined products have already come under pressure this year, which has proved supportive of product cracks in international markets. This latest development should provide further support over the remainder of the year.
European natural gas prices strengthened further yesterday, which also helped to drag Asian spot LNG prices higher.
Markets have been anticipating signs of increased flows of Russian gas into Europe following reports that President Putin had ordered Gazprom to start refilling its European storage from 8 November.
However, right now, this does not seem to be happening. Flows via the Europe-Yamal pipeline have not picked up yet, which has raised concerns once again about tightness as we head. # Oil Prices Edge Higher on Lack of OPEC+ Action
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