By Adedapo Adesanya
Prices of the crude oil grades fell on Monday after United States production rose amid weaker economic data out of China, with the Brent dropping 94 cents or 0.98 per cent to sell at $94.83 a barrel and the West Texas Intermediate (WTI) crude declining by $1.37 or 1.6 per cent to $86.53 a barrel.
Oil output in the United States climbed to nearly 12 million barrels per day in August, the highest since the onset of the COVID-19 pandemic, monthly government data showed.
Overall US output peaked at 13 million bpd in late 2019 and has not returned to that level since the pandemic started as rigs have been shut in and as costs for equipment and labour increased rapidly.
Moves by President Joe Biden on oil and gas companies, including investing some of their record profits in lowering costs for American families, also weakened prices.
It was reported that he would call on Congress to consider requiring oil companies to pay tax penalties and face other restrictions, the official said. The President has previously pushed oil companies to raise production rather than use profits for share buybacks and dividends.
The administration has also relied on releasing supplies from the Strategic Petroleum Reserves (SPR) to ease a supply crunch. About 1.9 million barrels were released from the SPR last week as part of the government’s plan to release 180 million barrels.
Meanwhile, factory activity in China, the world’s largest crude importer, fell unexpectedly in October, weighed down by softening global demand and strict COVID-19 restrictions that hit production.
Strict COVID-19 curbs in China have hit economic and business activity, curtailing oil demand. China’s crude oil imports for the first three quarters of the year fell 4.3 per cent yearly for the first annual decline since at least 2014.
The Organisation of the Petroleum Exporting Countries (OPEC) on Monday raised its forecast for medium and long-term oil demand and said $12.1 trillion of investment is needed to meet this demand despite the energy transition.
In its report, the group said world oil demand will reach 103 million barrels per day in 2023, up 2.7 million bpd from 2022. The 2023 total demand is up 1.4 million bpd from last year’s prediction.
OPEC also raised its demand forecasts for the medium term to 2027, saying the figure is up by almost 2 million bpd by the end of the period from last year.
Still, the cartel is upbeat about its later prospects, seeing its market share rising. US tight crude supply is seen peaking after the late 2020s, rather than around 2030 last year.
“Oil is expected to remain the number one fuel in the global primary energy mix,” the report said.
The group is expected to hold its next meeting in Vienna on December 4, one day before an agreement by the Group of Seven countries to cap Russian oil sales at an enforced low price is due to go into effect.
