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In trading on Thursday (3), despite reports that major producing countries agreed to gradually increase production starting in January, deviating from market expectations of extending the current scale of production cuts, the Crude oil futures prices still rose.
The Wall Street Journal cited people familiar with the matter who reported that OPEC + agreed to increase production by 500,000 barrels per day starting in January and will continue to increase production in the coming months.
James Williams, energy economist at WTRG Economics, said: “Detailed information is poor, but increased production by 500,000 barrels per day shows that OPEC and OPEC + are adjusting between supply and demand to reduce inventories. of oil to its targets. ” Oil-producing countries hope to reduce crude inventories. At the average of 5 years.
“China has driven the recovery in demand in Asia. This is good news for OPEC +, but recent lockdown measures in Europe and the United States and the weekly EIA report show a decline in demand, which is bad news for OPEC + “.
“However, OPEC + wisely decided to hold a monthly meeting, because the uncertainty of the new coronavirus makes it difficult to predict the situation of crude oil consumption, highlighting the correction of the monthly OPEC + meeting.”
“The availability of vaccines means that we can see a new wave of recovery in Western countries as early as February, and then see that demand is close to returning to normal at the end of the second quarter.”
Ahead of the OPEC + meeting on Thursday, OPEC + is widely expected to decide to extend the current scale of production reduction of 7.7 million barrels per day. If there is no decision on Thursday, it will lower the production reduction limit to 5.7 million barrels from January as originally planned. / Day.
Velandera Energy CFO Manish Raj said that after news of an increase in production of 500,000 barrels per day, oil prices did not seem to react much. “The bigger question is how quickly the remaining production cut quotas will be released.”
- The price of WTI crude oil futures for January delivery rose 44 cents, or nearly 1%, to close at $ 45.72 a barrel.
- The price of Brent crude futures for February delivery rose 51 cents, or nearly 1.1%, to settle at $ 48.76 a barrel.
Capital Economics Middle East and North Africa economist James Swanston said: “Before this week, the general public expected the organization to extend the current cut-off cap for three months, but this plan has encountered several obstacles, although Saudi Arabia clearly supports it. However, other key members such as the UAE have opposed the extension and demanded a higher level of implementation of the production reduction quota. “
Some manufacturers believe that positive progress on the new corona vaccine will drive up oil prices, leading to higher production.
“The recent positive news about the new corona vaccine should boost oil prices in the next 12 months,” Swanston said.
Other energy raw materials
- The price of gasoline futures for January delivery rose 1.7% to close at $ 1.2606 per gallon.
- The price of hot fuel oil futures for January delivery rose 1.9% to close at $ 1.3926 per gallon.
- The price of natural gas futures for January delivery fell 9.2%, closing at US $ 2,523 per million Btu.
After the EIA released its natural gas inventory report on Thursday, natural gas continued to decline sharply. Last week (through 11/27) the domestic supply of natural gas in the United States was reduced by one billion cubic feet. According to a survey by S&P Global Platts, analysts expect, on average, natural gas supply to fall by 13 billion cubic feet during the week.
Commodities analyst Christin Redmond said that before the EIA report was released, natural gas prices have fallen dramatically because weather forecasts show that temperatures in the U.S. Midwest, West, and Northeast regions will be warmer. higher than normal in the next 6 to 10 days. “
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