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Crude Oil Rises Ahead of OPEC+ Meeting Today

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Crude oil prices rose on Thursday as data from the Energy Information Administration (EIA) revealed that U.S crude oil inventories dropped last week for the sixth straight week in response to rising global demand for crude oil.

Nigerian type of crude oil, Brent crude oil gained 94 cents or 1.3 percent to $75.56 per barrel on Thursday morning at 11.22 am Nigerian time, while the U.S. West Texas Intermediate (WTI) crude oil rose by 93 cents or 1.3 percent to $74.40 a barrel.

In June, Brent gained 8 percent to hit its highest since October 2018. WTI appreciated by 10 percent in the same month, also trading at its highest since October 2018.

Oil experts are predicting a further increase in oil prices given the growing demand for the commodity in most regions.

In the first half of the year, the stage has been set for further improvement and for economic and oil demand growth,” said Tamas Varga, oil analyst at London brokerage PVM Oil.

OPEC and allies, known as OPEC+, will meet today, Thursday July 1st, 2021 to decide whether to increase supply next month and consider extending its overall crude oil agreement beyond April 2022, stated sources cited by Reuters.

On Wednesday, despite rising oil prices, OPEC+ warned of growing uncertainties and the risk of an oil glut in 2022.

Given the sharp demand increase we expect for this summer, we think the group will modestly increase production. Even so, the oil market will remain undersupplied,” said UBS analyst Giovanni Staunovo, predicting that larger oil inventory declines will lift prices higher in the third quarter.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Oil Prices Rise 2% on Positive Crude Inventories Data, Tight Supply Expectations

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Oil prices rose more than 2 percent on Wednesday after data showed crude and inventories fell unexpectedly last week and reports that the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ may delay a planned oil output increase.

Brent crude futures settled up $1.43, or 2.01 percent, at $72.55 a barrel and the US West Texas Intermediate (WTI) crude rose $1.4, or 2.08 percent to $68.61.

The US Energy Information Administration (EIA) reported an inventory draw of a modest half a million barrels for the week to October 25.

The change in oil stocks compared with a build of 5.5 million barrels for the previous week, pressured oil prices at the time.

The American Petroleum Institute (API), meanwhile, on Tuesday reported estimated inventory draws across crude and fuels, helping prices move higher for a time. However, they remained subdued due to expectations of a ceasefire in the Middle East.

The country’s petrol stocks shed 2.7 million barrels in the week to October 25, with production at an average of 9.7 million barrels daily. These figures compared with an inventory build of 900,000 barrels for the previous week, when production stood at an average of 10 million barrels daily.

Pressure also came as the market learned that OPEC+ could delay a planned oil production increase in December by a month or more because of concern over soft oil demand and rising supply.

Traders are betting that OPEC+ will hold off on the planned increase, deferring to Saudi Arabia’s top-down approach since the country acts as the de facto leader of the group and has always stepped in to help the alliance when it is underperforming.

The group is scheduled to raise output by 180,000 barrels per day in December. OPEC+ has cut output by 5.86 million barrels per day, equivalent to about 5.7 per cent of global oil demand.

OPEC Monthly Oil Market Report downgraded demand growth for 2024 to 1.9 million barrels per day while demand forecasts for 2025 slipped another 102,000 barrels per day to 1.6 million barrels per day.

China, meanwhile, ramped up imports by 16 per cent month over month in August, but the rise still falls short of August 2023 levels, keeping a lid on demand and by extension, the market.

OPEC+ is scheduled to meet on December 1 to decide its next policy steps.

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Crude Oil Prices Dip Further as Israel Plans End to Lebanon Conflict

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Oil prices extended losses on Tuesday after Israel signalled a diplomatic solution to the war in Lebanon, adding to a more than 6 per cent drop in the previous session on Monday after Israel carried out its retaliatory strike on Iran at the weekend

Brent crude futures settled down 30 cents, or 0.4 per cent at $71.12 a barrel while the US West Texas Intermediate (WTI) crude shed 17 cents, or 0.3 per cent to $67.21 a barrel.

Israel’s Prime Minister, Mr Benjamin Netanyahu will hold a meeting on Tuesday evening with ministers and the heads of the country’s military and intelligence community about talks for a diplomatic solution to the war in Lebanon.

Recall that Israel is currently embroiled in fighting with two separate groups, Hamas and Hezbollah backed by Iran in the Middle East.

Meanwhile, Iran said it will use all available tools to respond to Israel’s weekend attack. If this happens, it could create a fresh wave of tensions.

Also pressuring prices is the declining oil demand from China, the world’s largest crude oil importer, which continues to impact global oil consumption and prices.

Market analysts note that demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy.

According to the American Petroleum Institute (API), crude oil inventories in the US fell by 573,000 barrels for the week ending October 25. The API reported a 1.643-million-barrel build in crude inventories for the week prior.

So far this year, crude oil inventories in the world’s largest oil producer have slumped by just over 6 million barrels since the beginning of the year, according to API data.

Official US government data from the Energy Information Administration (EIA) is expected later on Wednesday.

The US Federal Reserve will cut interest rates by 25 basis points on November 7. Lower interest rates cut the cost of borrowing, which can buoy economic activity and boost oil demand.

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Crude Oil Prices Drop 6% as Market Overlooks Israel’s Attack on Iran Targets

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Oil prices dipped over 6 percent as the market reacted to Israel’s limited attacks on Iran on Monday.

Brent futures settled at $71.42 a barrel, down $4.63 or 6.09 percent while the US West Texas Intermediate (WTI) crude futures finished at $67.38 a barrel, $4.40 or 6.13 percent.

Over the weekend, jets from Israel completed three waves of strikes before dawn against missile factories and other sites near Tehran and in western Iran, heightening tensions in the region further.

The attacks were more tailored toward military targets – including Iran’s air defences, as well as missile and drone production, and launch facilities – easing fears that Israel might attack Iran’s nuclear facilities or oil infrastructure.

Also, Iran’s Supreme Leader Ayatollah Ali Khamenei helped cool tensions on Sunday when he signalled there would not be any direct response to Israel’s latest attacks.

The markets have been waiting for the majority of the month for a retaliation by Israel following the direct Iranian offensive against the Jewish state earlier this month. Broader Middle East tensions have continued to rise after the attack on Israel by Iran-backed Hamas on October 7 of last year.

Iran accounts for up to 4 per cent of global oil supplies, according to the US Energy Information Administration (EIA).

This development has led analysts like Citi to lower Brent’s price target for the next three months to $70 a barrel from $74, factoring in a lower risk premium in the near term.

A de-escalation that will cause markets to refocus on surplus supply and lacklustre demand, the analysts added.

The Organisation of the Petroleum Exporting Countries and its allies in OPEC+ kept oil output policy unchanged last month, including a plan to start raising output in December.

The group will meet on December 1 ahead of a full meeting of OPEC+

Even before the latest developments, Goldman Sachs had warned that there was limited upside for oil prices in 2025, citing spare capacity and weak demand.

Market attention will also turn to Hamas‑Israel and Israel‑Hezbollah cease-fire talks that resumed over the weekend.

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