Adedapo Adesanya
By Adedapo Adesanya
Oil prices continued to chart lower on Thursday as investors wait to see how major producers will respond to the emergency crude release by major consuming countries.
The global crude benchmark, Brent futures, declined by $1.13 or 1.37 per cent to settle at $81.09 per barrel, while the United States grade, West Texas Intermediate (WTI) crude futures, fell by $1.49 or 1.9 per cent to trade at $76.90 per barrel.
Plans led by the United States in collaboration with China, India, South Korea, Japan and Britain to try to cool prices by releasing reserves of up to 80 million barrels have had a little effect on prices, though this may not be sustained for long.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) is due to meet next week, precisely on Thursday, December 2.
OPEC+ had rebuffed calls by the administration of President Joe Biden and others to speed up production increases and stuck to its monthly increments of 400,000 barrels a day as it unwinds earlier production cuts.
Now, traders wonder if OPEC+ will scrap planned increases in response to the release of strategic reserves.
According to reports, Saudi Arabia and Russia are considering a move to pause recent output increases.
Other members like the United Arab Emirates and Kuwait said they were fully committed to the OPEC+ agreement and had no prior stance ahead of next week’s meeting.
Iraq, also an OPEC member, said it backs continuing the 23-man alliance’s existing plan of raising output by 400,000 barrels per day for the next month, saying the outlook for the oil market was unclear due to turbulence in global markets.
It is unclear, however, whether the US will place the 50 million barrels from its reserve on the market since, under the swap arrangement being used, it must first be taken by private oil companies and then returned, with interest, at a later date.
Traders are also looking out for whether China will follow through on plans to release oil from its reserves.
Weekly data from Baker Hughes, which is usually is released on Friday was released early because of the Thanksgiving holiday in the US and it showed the number of oil rigs rose by 6 to 467.
