Oil advanced above $82 a barrel as traders weighed the odds of a release of crude from the US Strategic Petroleum Reserve after OPEC+ resisted a plea from President Joe Biden to boost supplies more quickly.
West Texas Intermediate rose 1 percent after surging 3.1 percent on Friday. The administration will consider data on Tuesday as it assesses measures to stem gasoline prices, Energy Secretary Jennifer Granholm said Sunday. Vitol Group, the biggest independent oil trader, told Bloomberg OPEC+ is unlikely to change its stance, citing Saudi Arabia’s decision to jack up official selling prices.
The OPEC+ position, including the need for caution, was reflected in comments from United Arab Emirates Energy Minister Suhail Al-Mazrouei.
The alliance has prevented “us from having double or triple the prices, and that’s something we need to appreciate,” Mazrouei told a conference in Dubai on Monday.
Oil’s rally to a seven-year high has alarmed Biden, who led calls from consumers last week for the Organization of Petroleum Exporting Countries and its allies to step up the pace they are reactivating the supply shuttered at the start of the pandemic. Despite his plea, the alliance chose to stick with a planned, modest hike of 400,000 barrels a day. That’s raised the possibility of an SPR release, which could be made in coordination with other states.
A sell-off in prices after US stockpile data last Wednesday was a bit overdone, said Vandana Hari, the founder of Vanda Insights in Singapore.
Given OPEC+ didn’t bow to US pressure and, so far, there’s been no release from the SPR, “the energy crisis is back in the driver’s seat,” she said.
Developments in key OPEC member Iraq were also in focus after Prime Minister Mustafa al-Kadhimi survived an assassination attempt early on Sunday from an explosive-laden drone targeting his residence in Baghdad.
It was not immediately clear who carried out the attack.
As the US government weighs its options to cut prices, Granholm highlighted the monthly survey by the Energy Information Administration that’s due to be released this week. Its short-term energy outlook provides forecasts on demand, supply, trade, and other information on oil and energy other markets.
A day after OPEC+ ignored Biden’s call to speed up the pace of output increases, Saudi Arabia raised its official crude prices for all buyers. That move is a signal the country will continue to resist US pressure to pump faster, said Mike Muller, the head of Asia for Vitol. Despite the hike, Asian buyers will probably take their full contractual volumes, traders said.
Crude has soared this year -- fanning inflation and lifting product prices -- as the roll-out of vaccines boosted mobility and stoked energy demand.
Additional consumption has been driven by a crunch in gas supplies.
Goldman Sachs Group Inc. has forecast that global benchmark Brent will hit $90 a barrel.
The oil market remains backwardated, a bullish pattern marked by near-term prices trading above those further out. Brent’s prompt spread was $1.02 a barrel on Monday compared with 70 cents a month ago.
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