Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil settles mixed on tight inventories, demand worries

Published 11/15/2021, 08:32 PM
Updated 11/16/2021, 02:50 PM
© Reuters. FILE PHOTO: The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021.  REUTERS/Christian Hartmann/File Photo

© Reuters. FILE PHOTO: The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann/File Photo

By Arathy S Nair

(Reuters) - Oil prices settled mixed on Tuesday, as prospects of tight inventories worldwide were offset by forecasts of a production increase in coming months and concerns over rising coronavirus cases in Europe.

Brent crude rose 38 cents, or 0.5%, to $82.43 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 12 cents, or 0.2%, to $80.76 a barrel.

"The oil market will remain tight in the short term, which should lend support to prices," said Commerzbank (DE:CBKG) analyst Carsten Fritsch.

Trafigura Group's Chief Executive Officer Jeremy Weir said the tightness in global oil markets was due to demand returning to pre-pandemic levels.

Oil output from Texas' Permian basin was forecast to reach a record 4.953 million barrels per day (bpd) in December.

U.S. crude stocks were expected to have risen for a fourth straight week, with analysts in a Reuters poll forecasting a build of about 1.4 million barrels last week. [EIA/S]

The first of two weekly supply reports, from industry group the American Petroleum Institute, is due later Tuesday.

However, the International Energy Agency (IEA) said the oil market rally may ease as high prices could provide a strong incentive to boost production, particularly in the United States.

The IEA expects average Brent prices to be around $71.50 per barrel in 2021 and $79.40 in 2022, while Rosneft said it may reach $120 in the second half of 2022, according to the TASS news agency.

Secretary General Mohammad Barkindo of the Organization of the Petroleum Exporting Countries expects an oil surplus as early as December and the market to remain oversupplied next year.

OPEC last week cut its world oil demand forecast for the fourth quarter by 330,000 bpd from last month's forecast, as high energy prices hampered economic recovery from the COVID-19 pandemic.

Worries about demand destruction also weighed as Europe has again become the epicentre of the COVID-19 pandemic, prompting some governments to consider reimposing lockdowns, while China is battling the spread of its biggest outbreak caused by the Delta variant.

The Biden administration has been considering tapping U.S. emergency stockpiles to cool rising oil prices. However, the acting head of U.S. Energy Information Administration said a release of oil from the U.S. Strategic Petroleum Reserve (SPR) would likely have only a short-lived impact on oil markets.

"The market looks fundamentally solid with strong physical markets, but with a lack of shorts in the market and SPR fears, the market simply cannot rally," said Scott Shelton, energy specialist at United ICAP (LON:NXGN).

The dollar touched a 16-month high against a basket of currencies after strong U.S. retail sales data. A stronger dollar makes oil more expensive for buyers using other currencies.

© Reuters. FILE PHOTO: The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021.  REUTERS/Christian Hartmann/File Photo

Germany's energy regulator also suspended the approval process for Nord Stream 2, a major new pipeline bringing Russian natural gas into Europe, driving benchmark Dutch front-month contract prices up 15%, the highest percentage gain in more than a month.

Higher prices for the fuel boosts oil demand as utilities switch to burning crude, rather than natural gas.

Latest comments

Still, nobody can mention the SPR releases we have been experiencing the last few months OR the constant increase in importing that is happening. This is not a change in demand, but a diversion to make it appear that demand is dwindling, and supply is overabundant. Our crisis is inbound, just delayed. If all of this effort is put forth to avoid investment in oil and gas, all that will happen is a delayed, longer, stronger energy shortage. We must promote investment. Long oil.
Tight inventories. What about the draw down?
totally fake news. The reporter so d*mb
I notice that when a reporter writes about the negative elements of the oil market, it becomes "totally fake news" and s/he is "so d*mb". To me, the person who made the comment is a pathetic sod who just can't understand what's in the story.
Greedy OPEC making trillions off the rest of the planet
apparently you still dont understand how it works. it is not about being greedy or generous. it is all about money
Yes, paying for Saudi royal privileges is a duty of consuming countries. Yes, you are so right.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.