MOSCOW (MRC) -- Crude oil futures extended gains in mid-morning trade in Asia Nov. 2 after a bullish overnight session, as supply remained tight amid ongoing outages in Africa and ahead of the OPEC+ meeting on Nov. 4, reported S&P Global.
At 11:10 am Singapore time (0310 GMT), the ICE January Brent futures contract was up 21 cents/b (0.25%) from the previous close at USD84.92/b, while the NYMEX December light sweet crude contract rose 13 cents/b (0.15%) at USD84.18/b. Both benchmarks had settled higher by 0.5%-1.2% overnight.
Output from OPEC remains partially crippled after outages last month at Nigeria and Libya knocked out at least 100,000 b/d of supply.
While some analysts have voiced caution on the pace of the increase in oil prices, others have grown more bullish, citing the ongoing global energy crisis and years of underinvestment in capacity.
"Crude prices are rallying after OPEC+ failed to hit their production goals and both Kuwait and Iraq signaled they support keeping the gradual 400,000 b/d output plan intact," said OANDA senior market analyst Edward Moya.
Analysts from Bank of America said Nov. 1 that they expect crude prices to reach USD120/b by the end of June 2022.
ING analysts Warren Patterson and Wenyu Yao pointed to the widening backwardation in WTI time spreads in recent weeks, citing inventory levels in US storage hub Cushing, Oklahoma reaching critically low levels.
"The WTI prompt time spread continues to hold firm and in fact the spread hit an intraday high of USD1.88/b yesterday (Nov. 1). The strength in the WTI structure is largely due to the continued decline in inventories at the WTI delivery hub, Cushing," Patterson and Yao said.
Latest figures from the US Energy Information Administration had showed crude inventory levels at Cushing declining to 27.3 million barrels as of Oct. 22 -- a low not seen since October 2018. Investors will now be looking towards this week's inventory report from the EIA for guidance on the next move in prices.
OPEC+ ministers are set to meet on Nov. 4 to discuss the course of action for December, where output is expected to increase by 400,000 b/d, according to a July agreement. The coalition is under pressure from several consuming countries, including the US, Japan and India, to further ramp up its output to temper oil prices that have surged amid a global gas crisis, outages and a lack of oil investments due to climate change pledges.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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