U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher shortly before the regular session opening on Friday after mounting a strong recovery the previous session following a steep two-day plunge.
The price action suggests that bullish traders are moving on from this week’s unexpected jump in U.S. inventories and are shifting their focus to expectations OPEC and its allies will keep supply tight. Buyers also seem to be downplaying the prospect of more Iranian exports.
At 11:20 GMT, December WTI crude oil is trading $82.99, up $0.18 or +0.22% and December Brent crude oil is at $84.50, up $0.18 or +0.21%. Both futures contracts are in a position to finish lower for the week.
US Crude Stocks Rise More than Expected, Cushing Hub Plunges – EIA
U.S. crude stocks rose more than expected in the latest week, the government reported on Wednesday, but inventories at the Cushing, Oklahoma, storage hub dropped sharply again, suggesting markets remain tight due to steady demand and stagnant production, Reuters reported.
Crude inventories rose 4.3 million barrels to 430.8 million barrels the week-ending October 22, according to the U.S. Energy Information Administration (EIA). This number was well-above the 1.9 million barrels analysts had expected.
U.S. gasoline stocks fell by 2 million barrels in the week to 215.8 million barrels, lowest since 2017, the EIA said. Distillate stockpiles, which include diesel and heating oil, fell by 432,000 in the week to 125 million barrels.
OPEC+ Expected to Stay the Course on Oil Output Plans
An OPEC+ committee largely stuck to forecasts of a strong demand rebound this year and next ahead of a meeting next week, at which the group is expected to rubber stamp a planned output increase of 400,000 barrels per day (bpd) in December, Reuters reported.
The Joint Technical Committee (JTC), which met on Thursday, now expects oil demand to grow by 5.7 million bpd in 2021, 120,000 bpd below OPEC’s forecast in its latest monthly report, two OPEC+ sources said.
The JTC left its demand forecast for next year steady at 4.2 million bpd, one of the sources said.
OPEC+’s move to raise daily output by 400,000 bpd is not expected to shock prices lower. Furthermore, don’t expect OPEC and its allies to succumb to pressure from major consumer nations to speed the rate of output hikes.
“Demand (for oil) can decline as there is still uncertainty. We also see there is yet another pandemic wave spreading across the world,” Russian Deputy Prime Minister Alexander Novak told Reuters.
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This article was originally posted on FX Empire