After yesterday’s failed oil rebound attempt, WTI futures expiring in January are down again at the opening of the U.S. markets to 63.8 $/barrel. Brent crude oil futures were trading at 66.5 $/barrel, down from yesterday session. The dynamics of today’s trading on WTI and Brent were strongly affected by Russia’s statements in favour of an increase in oil production.
The news published by Bloomberg on the sidelines of the OPEC+ meeting contradicted previous rumours favouring the rejection of the planned increase of 400 thousand barrels of oil per day. The OPEC+ cartel led by Saudi Arabia and Russia had so far resisted US pressure to increase production of WTI and Brent. As anticipated in several recently published reports, oil demand is expected to slow down leading to a production surplus in the first quarter of 2022. This factor brought the cartel to desist last month from deciding in direction of an output raise.
A Reuters poll released on Tuesday found that OPEC pumped 27.74 million barrels per day in November, up by 220,000 barrels from October but below the 254,000-increase that OPEC members were allowed to pump under the latest OPEC+ agreement.
Additional burden came in the last week from the new variant of coronavirus, Omicron, of which little is yet known. Omicron variant threatens to undermine oil demand dynamics especially in the United States. The WTI, the contract traded at NYMEX, has been considerably affected by the policy of increased crude oil production in the USA. After several unheeded appeals to OPEC by President Biden, the agreement between the USA and China to release strategic reserves helped to calm down WTI rising price pressures, thanks also to the strength of the US dollar which has traded significantly higher through the summer months.