Oil tumbles on Q1 oversupply worries, new variant
By Florence Tan
SINGAPORE (Reuters) – Oil prices fell more than 2% on Friday amid fears that a global supply surplus could swell in the first quarter following a coordinated release of crude reserves by states -United among major consumers and as a new variant of COVID-19 spooked investors.
Brent crude futures extended declines for a third session, falling $ 1.69, or 2.1%, to $ 80.53 a barrel at 3:27 a.m. GMT. U.S. West Texas Intermediate (WTI) crude fell $ 2.04, or 2.6%, to $ 76.35 a barrel. There were no settlements for WTI Thursday due to the Thanksgiving holiday.
Oil prices have likely fallen along with the widening of financial markets, fearing that the new variant will affect demand by again limiting movements, while market participation has plummeted due to the vacations in the United States, CMC Markets analyst Kelvin Wong said.
The administration of US President Joe Biden on Tuesday announced plans to release millions of barrels of oil from strategic reserves in coordination with other major consuming countries, including China, India and Japan, in an attempt to cool the price.
Such a publication is likely to inflate supplies in the coming months, an OPEC source said, according to the findings of a panel of experts advising ministers of the Organization of the Petroleum Exporting Countries (OPEC) .
The Council of the Economic Commission (ECB) expects a surplus of 400,000 barrels per day (bpd) in December, rising to 2.3 million bpd in January and 3.7 million bpd in February if the countries consumers are moving ahead with the publication, the OPEC source said.
Forecasts of rising oil surpluses cloud the outlook for OPEC’s meeting with its allies, a group known as OPEC +, on December 2 to decide on immediate production. The group must decide whether it will continue to increase production by 400,000 bpd in January.
Still, benchmark contracts are expected to post their first weekly gain in nearly a month, as the overall volume of crude reserve release – estimated at 70-80 million barrels – was lower than market participants expected. .
“As the volume is small, I think it is aimed at easing the tightening of supply, rather than having a big impact on the oil markets,” Association president Tsutomu Sugimori told reporters on Thursday. Japan Oil Company (PAJ).
Next Monday, the world powers and Iran will resume negotiations to relaunch a 2015 nuclear deal that could lead to the lifting of US sanctions on Iranian oil exports.
However, the failure of Iran and the International Atomic Energy Agency to reach even a modest agreement on monitoring Tehran’s nuclear facilities this week does not bode well for next week’s talks, a said Henry Rome, analyst in Eurasia.
“The fact that Iran did not do this, and instead took a hard line with the IAEA, is another negative sign of its interest in reviving the 2015 nuclear deal,” he said. in a note of November 24.
(Edited by Christopher Cushing and Jacqueline Wong)