Oil Jumps Two Weeks Higher Due To Strong Demand And Tightened Supply | OPEC News

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Global benchmark Brent crude futures settled at $ 84.78 a barrel while US West Texas Intermediate settled at $ 84.15.

Oil prices rose to a two-week high on Tuesday after the US lifted travel restrictions and other signs of a post-pandemic global recovery strengthened the outlook for demand, while supply remained tight.

Prices rose after the US Energy Information Administration (EIA) in its Short Term Energy Outlook (STEO) on Tuesday predicted that retail gasoline prices will decline in the coming months.

The administration of US President Joe Biden said it will use the price predictions in the STEO report to determine whether to release oil from the nation’s Strategic Oil Reserve (SPR).

Analysts said that if the STEO had shown a huge increase in expected gasoline prices, the Biden administration would likely have released a lot of oil from the SPR quickly, which would have depressed prices.

Global benchmark Brent crude futures rose $ 1.35, or 1.6% to $ 84.78 a barrel, while US West Texas Intermediate crude rose $ 2.22, or 2.7 percent, coming in at $ 84.15.

These were the highest closures for both benchmarks since Oct 26.

The price of Brent rose more than 60 percent this year and hit a three-year high of $ 86.70 on October 25, supported by the recovery in demand and the tightening of supply by the Organization of Exporting Countries. of oil and allies, known as OPEC +.

“The EIA STEO offers President Biden plenty of cover for doing nothing and says he is waiting for bearish forecasts to occur,” said Bob Yawger, Mizuho’s director of energy futures in New York.

In the STEO, the EIA predicted that average quality retail gasoline prices would drop from $ 3.32 per gallon in November to $ 3.16 in December and $ 3.00 in the first quarter of 2022.

OPEC + added 400,000 barrels per day (bpd) of crude oil to global supply at last week’s OPEC + meeting. President Biden wanted him to add more. OPEC + is expected to add 400,000 bpd per month through June 2022, Yawger said.

“Any release from the US SPR, although it would likely have a temporary bearish effect on immediate prices, is not a lasting solution to a supply / demand imbalance,” said Louise Dickson, senior oil markets analyst at Rystad Energy.

Global oil reserve production capacity could decline next year when air passengers fly back, removing an important cushion that the market is currently enjoying, said Amin Nasser, chief executive officer of Saudi Aramco.

Travelers headed back to the United States, as Biden’s $ 1 trillion infrastructure bill passing and better-than-expected Chinese exports helped paint a picture of a recovering global economy.

JPMorgan Chase said global oil demand in November had already nearly returned to pre-pandemic levels of 100 million barrels a day after last year’s plunge.

In India, fuel demand increased in October to a seven-month high, with gasoline sales reaching an all-time high.

Despite a tight global market, analysts expect US crude oil inventories to have risen for the third straight week, possibly helping to limit further price increases.

The first of two supply reports this week, from industry group American Petroleum Institute, is scheduled for Tuesday.

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