By Adedapo Adesanya
Oil prices traded higher on Friday as renewed supply concerns after producers rejected calls to accelerate output increases even as demand nears pre-pandemic levels.
Brent crude rose to $82.74 per barrel after it grew by $2.2 or 2.73 per cent, while the United States West Texas Intermediate (WTI) crude appreciated by $2.46 or 3.12 per cent to settle at $81.27 per barrel.
Prices fell on Thursday after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) said at the end of its meeting that it would raise the monthly overall production by 400,000 barrels a day in December.
This came at a time when pressure was mounting for more OPEC+ output, while Saudi Arabia was reported to soon exceed the 10 million barrels per day threshold of oil production.
But as the group pushed back against pressure from the administration of Mr Joe Biden of the United States to pump more oil, prices returned to their bullishness.
The global benchmark, Brent was down 1.2 per cent this week while WTI prices lost nearly 2.8 per cent, for a second weekly loss in a row, following a nine-week streak of gains.
Market analysts noted that OPEC+ is carefully trying to protect the market balance amid the downside risks to demand but noted that it will not be a surprise if the cartel at its next December meeting decides to reengineer its current output cut tapering plan.
This could be done to allow for higher target productions for the countries with spare capacities, such as Saudi Arabia, UAE and Russia, to compensate for expected underperformance from some regions such as West Africa, particularly Nigeria.
The US said it would consider all tools at its disposal to guarantee affordable energy, including the possibility of releasing oil from strategic petroleum reserves (SPR).
But according to the investment bank, Goldman Sachs, if the US tapped its emergency oil supplies, such a move would only be modest and temporary help and could in fact backfire given the structural nature of the oil market deficits starting in 2023.
However, the market also gained support from data showing US employment rose more than expected in October.
The country’s Labour Department’s closely watched employment report’s survey of establishments on Friday showed nonfarm payrolls increased by 531,000 jobs last month. Data for September was revised higher to show 312,000 jobs created instead of the previously reported 194,000.
Employment is 4.2 million jobs below its peak in February 2020. Job growth has averaged 582,000 per month this year.
Data showed the number of active US oil-drilling rigs climbed by six to 450 this week– the biggest increase since the week ended Oct. 15 — implying a future uptick in production.
Modupe Gbadeyanka