Forecast rise in US stockpiles and possibility of further increases in Opec+ output weigh on short-term sentiment
01 February 2022 - 14:48
byAlex Lawler
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London — Oil slipped on Tuesday, but remained close to a seven-year high, weighed down by speculation that Opec+ could go further than expected to add supply at a meeting this week and expectations of a rise in US inventories.
While the Organisation of Petroleum Exporting Countries and allies, known as Opec+, has been expected to maintain its policy of gradual production hikes at a meeting on Wednesday, Goldman Sachs said there was a chance of further steps.
“We view growing potential for a faster ramp-up at this meeting, given the pace of the recent rally and the likely pressure from importing nations,” the bank said in a January 31 report, adding the outcome remained “evenly balanced” between an accelerated response and a status quo increase.
Brent crude was down 74c, or 0.8%, at $88.52 a barrel at 10.30am GMT. West Texas Intermediate (WTI) crude slipped 83c, or 0.9%, to $87.32.
Oil was also pressured by expectations that this week’s US supply reports will show an increase in crude stockpiles. Analysts expect stocks to have risen by 1.8-million barrels.
The first of this week’s two supply reports, from the American Petroleum Institute, is out at 9.30pm GMT.
Brent and WTI hit their highest levels since October 2014 on Friday, at $91.70 and $88.84, respectively. They gained about 17% in January on the back of a supply shortage and tensions between Russia and the West over Ukraine, and in the Middle East.
Opec undershot its promised output boost in January, a Reuters survey found, and other analysts expect the rally to persist.
“The oil market is currently unreservedly bullish,” said Tamas Varga of oil broker PVM. “It’s international tension, the perception of tight supply and the cold winter that are the most important factors behind the strength.”
Rising differentials in the physical crude market imply there is concern about tight supply, Varga said. One of the North Sea crudes that underpins Brent, Ekofisk, was bid at the highest in more than a decade on Monday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Crude prices ease, but market remains bullish
Forecast rise in US stockpiles and possibility of further increases in Opec+ output weigh on short-term sentiment
London — Oil slipped on Tuesday, but remained close to a seven-year high, weighed down by speculation that Opec+ could go further than expected to add supply at a meeting this week and expectations of a rise in US inventories.
While the Organisation of Petroleum Exporting Countries and allies, known as Opec+, has been expected to maintain its policy of gradual production hikes at a meeting on Wednesday, Goldman Sachs said there was a chance of further steps.
“We view growing potential for a faster ramp-up at this meeting, given the pace of the recent rally and the likely pressure from importing nations,” the bank said in a January 31 report, adding the outcome remained “evenly balanced” between an accelerated response and a status quo increase.
Brent crude was down 74c, or 0.8%, at $88.52 a barrel at 10.30am GMT. West Texas Intermediate (WTI) crude slipped 83c, or 0.9%, to $87.32.
Oil was also pressured by expectations that this week’s US supply reports will show an increase in crude stockpiles. Analysts expect stocks to have risen by 1.8-million barrels.
The first of this week’s two supply reports, from the American Petroleum Institute, is out at 9.30pm GMT.
Brent and WTI hit their highest levels since October 2014 on Friday, at $91.70 and $88.84, respectively. They gained about 17% in January on the back of a supply shortage and tensions between Russia and the West over Ukraine, and in the Middle East.
Opec undershot its promised output boost in January, a Reuters survey found, and other analysts expect the rally to persist.
“The oil market is currently unreservedly bullish,” said Tamas Varga of oil broker PVM. “It’s international tension, the perception of tight supply and the cold winter that are the most important factors behind the strength.”
Rising differentials in the physical crude market imply there is concern about tight supply, Varga said. One of the North Sea crudes that underpins Brent, Ekofisk, was bid at the highest in more than a decade on Monday.
Reuters
Brent crude hits fresh seven-year high in rally that could fuel inflation
Fuel prices to rise from Wednesday
Oil prices rise on supply and geopolitical issues
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