Oil rose as U.S. crude inventories fell, exacerbating concerns about a tight market after traders expressed doubts that OPEC + could meet its agreement to accelerate the pace of rising supply. .
West Texas Intermediate rose above $ 116 a barrel, recovering losses of more than three percent from the beginning of the session. U.S. crude oil stocks fell more than five million barrels last week, while New York area gasoline stocks fell to the lowest level since 2017, according to a report from the U.S. Energy Information Thursday.
Earlier, OPEC + agreed to increase supply by 50% to add 648,000 barrels. The decision comes after the European Union approved a partial ban on Russian oil imports. The ruling suggests Riyadh has finally accepted Washington’s request for more barrels. However, with the increase distributed by the member nations of the group, it is likely that the actual production delivered to the market will be much lower than announced.
Although the increase in production is greater, “there is a healthy skepticism” in the market about whether it is possible to increase production, which is why oil rose after the announcement, said Tom Petrie, president of Petrie Partners in a Bloomberg TV interview.
The increase in cartel production will be distributed proportionally among the members in the usual way. This means that countries that have not been able to increase production, such as Angola, Nigeria and, more recently, Russia, would still have a higher share. This could make the real supply momentum lower than the official figure, as has often been the case in recent months.
“Nothing changes materially,” Jeff Currie, head of commodity research at Goldman Sachs Group Inc., said Thursday in an interview with Bloomberg Television. The OPEC alliance decision simply compresses three production increases in two months, he said.
Prices fell earlier amid signs of a thawing relationship between Saudi Arabia and the United States. Biden will likely meet with the de facto Saudi ruler, Crown Prince Mohammed Bin Salman if he travels to the country. This could pave the way for increased production in the kingdom and help reduce U.S. fuel prices, which have skyrocketed to record highs, putting pressure on Biden ahead of the November midterm elections.
The Financial Times reported that Riyadh had indicated to Western allies that it was willing to increase its oil supply.
Prices
- The WTI for delivery in July rose US $ 1.61 to US $ 116.87 a barrel in New York.
- Brent for the August liquidation rose US $ 1.32 to US $ 117.61 a barrel.
Oil capped its sixth monthly advance in May, the best streak of victories since early 2011, as markets tightened due to the war in Ukraine coincided with a recovery in demand as countries went remove virus restrictions. The European Union’s efforts to pass a partial ban on Russian oil imports were an obstacle after Hungary raised new or rejected demands.