Oil Falls Over Pressure on OPEC+ to Meet Production Quotas
Crude prices edged lower amid growing pressure for the White House to lobby the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, to hit their production quotas, OANDA analyst Edward Moya said in an overnight note.
A few members of the cartel have been struggling to reach production targets, causing OPEC+ to fall short of their agreed-upon output hike, Moya noted.
The outlook still has many risks but optimism is high that those will be short-lived, according to Moya. According to Delta Air Lines CEO Ed Bastian, omicron is expected to delay the rebound in travel demand by 60 days, the analyst said.
Most energy companies are still not investing in new drilling projects, resulting in a very tight oil market this year and likely over the next few years as well, Moya said.
West Texas Intermediate crude may pull back on speculation that US President Joe Biden is losing public favour, according to Moya.
Biden is facing setbacks on the Build Back Better Act and may resort to another release of strategic petroleum reserves, which could send WTI down to the $80 level, Moya said.
West Texas Intermediate (WTI) crude oil rose on Friday, climbing to a two-month high despite reports that China will tap its strategic reserves in a bid to check prices.
WTI crude for February delivery closed up US$1.70 to US$83.82 per barrel, MarketWatch reported. March Brent crude, the global benchmark, was last seen up US$1.55 to US$86.02 while Western Canada Select was up US$3.27 to US$71.02 per barrel.
China plans to release reserves from its strategic reserves beginning on the Feb.1 Lunar New Year, following up on a November agreement with the United States to use reserves to check rising prices. Read: Oil Dips as U.S Taps China, Japan on Strategic Reserves Release
The report comes as China customs data showed the country’s oil imports rose to a nine-month high of 10.87 million barrels per day in December.
“This put them almost 20% higher than in the previous December. As a result, the year-on-year change rate was positive again for the first time since March.
China’s crude oil imports in the year as a whole totalled 10.26 million barrels per day, resulting in a year-on-year decline – of 5.4% – for the first time in 20 years,” Commerzbank analyst Carsten Fritsch said in a note. #Oil Falls Over Pressure on OPEC+ to Meet Production Quotas
