Oil Prices Jump as China Releases Fuel Reserves
By Adedapo Adesanya
Oil prices appreciated on Monday night after news of the release of fuel reserves by China, causing the Brent crude to rise by 81 cents or 0.97 per cent to $84.53 per barrel as the West Texas Intermediate (WTI) increased by 48 cents or 0.57 per cent to trade at $84.05 per barrel.
China threw the market into confusion as it released petrol and diesel from its fuel reserve to arrest a price climb that has increased volatility in some parts of the country.
According to Chinese authorities, the diesel and petrol rotated out of the reserves will be used to increase market resources and reduce supply shortages in order to stabilize supply and prices.
However, signals that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will not release more fuel into the world eased the fears.
In recent months, oil prices had rallied on news that the 23-nation alliance will stick to a gradual and monthly production increase of 400,000 barrels per day despite calls from major big names to add to the quota.
US 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.
With the group set to meet on Thursday, November 4, it looks like it is not bothered as it is evident that it will be maintaining its position till the end of the year.
Support came from Kuwait and Iraq about OPEC+ sticking to plans to raise oil output by 400,000 barrels per day.
Kuwait’s oil minister Mohammad Abdulatif Al-Fares said on Monday that the OPEC member supports the plan to raise output, which would ensure adequate crude supply to balance the global market.
Iraq’s state oil marketing company, SOMO, said on Saturday that the OPEC member sees raising output as already planned was sufficient to meet demand and stabilize the market.
Recently, OPEC heavyweight Saudi Arabia also dismissed calls for more oil supplies from the group, saying the oil market was well-supplied.
Now, other than the potential for the market to return to surplus next year, the other factor holding back the group is the uncertainty over if and when Iranian supply could return to the market.
Iran held talks with six world powers to try to revive a 2015 nuclear deal that will resume by the end of November. If successful, the OPEC member could add more barrels into the market.