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Oil rises on demand outlook despite China fuel reserves release

CommoditiesNov 01, 2021 04:00PM ET
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© Reuters. FILE PHOTO: Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song

By Laura Sanicola

(Reuters) -Oil prices settled higher on Monday as expectations of strong demand and a belief that a key producer group will not turn on the spigots too fast helped reverse initial losses caused by the release of fuel reserves by No. 1 world energy consumer China.

Brent crude futures settled up 99 cents, or 1.1 %, to $84.71 a barrel after hitting a session low of $83.03.

U.S. West Texas Intermediate (WTI) crude futures gained 84 cents, or 0.6%, to $84.05, having fallen to $82.74 earlier.

A Reuters poll showed that oil prices are expected to hold near $80 as the year ends, as tight supplies and higher gas bills encourage a switch to crude for use as a power generation fuel.

Oil rallied to multi-year highs last week, helped by a post-pandemic demand rebound and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, sticking to gradual, monthly production increases of 400,000 barrels per day (bpd), despite calls for more oil from major consumers.

The increase in OPEC's oil output in October fell short of the rise planned under a deal with allies, a Reuters survey found on Monday, as involuntary outages in some smaller producers offset higher supplies from Saudi Arabia and Iraq.

OPEC+ is expected by analysts to stick to the 400,000 figure at its Nov. 4 meeting, with members Kuwait and Iraq in recent days voicing their support for it, saying those volumes were adequate.

"We feel that their position will be one where the status quo will be maintained while a 'wink and a nod' will be provided in accepting violation of quotas should Brent values gravitate back up into new 7-year high territory," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

U.S. President Joe Biden on Saturday urged major G20 energy producing countries with spare capacity to boost production to ensure a stronger global economic recovery, part of a broad effort to pressure OPEC+ to raise supplies.

Prices rose despite China saying in a rare official statement that it had released gasoline and diesel reserves to increase market supply and support price stability in some regions.

Exxon (NYSE:XOM) and Chevron (NYSE:CVX) are looking to add drilling rigs in the Permian shale basin after sharply cutting crews and output in the region last year, the companies said on Friday.

Oil rises on demand outlook despite China fuel reserves release
 

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Comments (8)
Manoj Kohli
Manoj Kohli Nov 01, 2021 9:46PM ET
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when excess liquidity will taper, oil prices will keep on tapering till 60$ continuously.
Ernest Wong CA
Ernest Wong CA Nov 01, 2021 4:17PM ET
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yep just TP @ $85.30 - $85.50 this morning, reduced by $40k from last week's $180k Longs; Brent now $85.35, next TP 86.00
Shane James
Shane James Nov 01, 2021 10:08AM ET
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Western propaganda outlets can't survive without mentioning China in every piece of their propaganda, even when it has nothing to do with China. Cope harder.
Jacob Steinschlag
Jacob Steinschlag Nov 01, 2021 5:53AM ET
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0,6% is hardly a drop as you can see. it's already up significantly.
Eduff San
Eduff San Nov 01, 2021 4:29AM ET
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fake news again. Oil still going up
ramesh chand duhoon
ramesh chand duhoon Nov 01, 2021 4:29AM ET
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Something wrong, why spreading fake news. you are absolutely right friend.
Edward Chong
Edward Chong Nov 01, 2021 12:17AM ET
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bad sign. inventory is really tight this round.
DE SP
DE SP Oct 31, 2021 11:24PM ET
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Commie China selling commodities for liquidity needs of their ongoing great financial crisis.
Дмитро Білавич
Дмитро Білавич Oct 31, 2021 11:24PM ET
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Commie China know what it do because this country has a planned economy mixed with market economy and in this is it power unlike market economy of the West countries
Jose Maderno
Jose Maderno Oct 31, 2021 9:43PM ET
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"U.S. energy firms added oil and natural gas rigs for a 15th month in a row in October," What they don't tell you.... On 10/25/2019 the U.S. had 830 rigs.  10/29/2021 - 544 rigs.  15 months of increases to get back to 66% of the rigs.  With Oil AND Gas prices at multi-year highs.  Yep, the prices will be coming down momentarily. LOL
Scott Alexander
Scott Alexander Oct 31, 2021 9:43PM ET
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The EV market and Oil land baron's are not unhappy. The consumer market will be. Look for less presents under the tree.
 
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