The black liquid was bullish in the London session today ahead of the Organization of Petroleum Exporting Countries and its allies (OPEC+) meeting today which is to decide on crude supply output after a recent rally in price of the black liquid which many say reflects the recovering demand and a return to normalcy from the COVID-19 pandemic.
Brent crude, the global benchmark, is up 1.78%, currently trading $80.77 per barrel. It rose by 1.5% last week. The U.S. benchmark, the West Texas Intermediate (WTI) is up 1.74%, currently trading $77.17 a barrel. The pair has been posting positive gains for the past six weeks.
Over the past few weeks, Oil prices have risen due to a rise in global demand and supply disruptions, pushing Brent to trade above $80 per barrel. A price point not traded in almost three years. The oil price rally is intensified by an even bigger increase in gas prices, which have spiked 300% and have come to trade close to an equivalent of $200 per barrel due to supply shortages and low production of other fuels.
The OPEC+ meeting
The OPEC+ is facing pressure from some countries including the U.S., to add back more barrels to the market to help lower the prices of oil as demand has recovered at a faster rate than expected in some parts of the world. But this may be the case as according to four Reuters sources last week, the producers were considering adding more than what was agreed on in their initial deal but none gave details on how much more, or when supply would increase. The earliest any increase would take place would be November since the previous OPEC+ meeting decided October volumes.
Today, another three sources told Reuters that the group of oil producers was likely to stick to their existing agreement to produce an additional 400,000 barrels per day (bpd) despite consumer calls for more oil and cheaper crude.
The OPEC+ is under pressure from big consumers, such as the United States and India, to add extra supplies to cool prices that have surged 50% this year. The OPEC+ agreed in July to boost output by 400,000 barrels per day (bpd) each month until at least April 2022 to phase out 5.8 million bpd of existing cuts.
What they are saying
Morgan Stanley (NYSE:MS) analysts said in a note that, “Our base case expectations for today’s OPEC meeting is that OPEC continues with its existing agreement to unwind its production cuts by around 400,000 bpd each month. However, if there is a reason to do so faster, it is because OPEC’s own oil consumption is also recovering at a rapid pace.”
Louise Dickson, senior oil markets analyst at Rystad Energy stated, “The market is taking no risks before today’s OPEC+ meeting, waiting to see what the alliance plans for November. A cautious OPEC+ supply approach without surprises should keep Brent largely stable.”
Bottomline
Investors are advised to trade cautiously as the oil market will react swiftly to any decision the OPEC+ takes today in its meeting. Other factors affecting oil prices include the bullish outlook from top banking giants like Goldman Sachs and Trafigura Group; vaccination efforts and easing of lockdown measures; top African oil exporters Nigeria and Angola struggling to boost output to their quotas set by the OPEC+; and hurricanes Ida and Nicholas, which swept through the U.S. Gulf of Mexico in August and September, damaging platforms, pipelines and processing hubs and ultimately shutting down most offshore production for weeks.
Related
Note: This article have been indexed to our site. We do not claim legitimacy, ownership or copyright of any of the content above. To see the article at original source Click Here
