Desk Report
Publish: 13 Nov 2021, 09:18 pm
Representational Image || Photo: Collected
Oil prices fell on Friday,
wiping out gains from the previous session, on worries that the U.S. Federal
Reserve will accelerate plans to boost interest rates to tame inflation.
Brent crude futures fell 70
cents, or 0.8%, to settle at $82.17 a barrel. U.S. West Texas Intermediate
(WTI) crude fell 80 cents, or 1%, to settle at $80.79 a barrel, reports Reuters.
Both benchmarks fell for a
third consecutive week, hit by a strengthening dollar and speculation that
President Joe Biden's administration might release oil from the U.S. Strategic
Petroleum Reserve to cool prices. On a weekly basis, Brent fell 0.7%, while WTI
declined 0.6%.
"This week has been a good
reminder for oil markets that prices are not only affected by the supply-demand
trajectory, but also from monetary policy forecasts and by forms of government
intervention," said Louise Dickson, senior oil markets analyst at Rystad
Energy. "Higher interest rates would provide even further support to the
dollar and even more downward pressure on oil prices."
U.S. Energy Secretary Jennifer
Granholm said on Monday that Biden could act as soon as this week to address
soaring gasoline prices.
"We believe that whatever
the announcement is will only have a short-term impact on price, but because of
the uncertainty the market is pulling back a little bit," said Phil Flynn,
senior analyst at Price Futures Group.
U.S. energy firms this week
added oil and natural gas rigs for a third week in a row. The oil and gas rig
count, an early indicator of future output, rose six to 556 in the week to Nov.
12, its highest level since April 2020, energy services firm Baker Hughes Co (BKR.N)
said on Friday.
Russia's Rosneft (ROSN.MM) the
world's second-biggest oil company by output after Saudi Aramco, warned on
Friday of a potential "supercycle" in global energy markets, raising
the prospect of even higher prices as demand outstrips supply.
Still, though there are
positive signs on the demand side, with air travel picking up rapidly, tighter
monetary and fiscal policy and the looming Northern Hemisphere winter will act
as a dampener.
The Organization of the
Petroleum Exporting Countries (OPEC) on Thursday cut its world oil demand
forecast for the fourth quarter by 330,000 barrels per day (bpd) from last
month's forecast as high energy prices hampered economic recovery from the
COVID-19 pandemic.
OPEC, Russia and allies, together known as OPEC+, agreed last week to stick to plans to add 400,000 bpd to the market each month.
"The oil market is
sleepwalking into a supply surplus," said Stephen Brennock of oil broker
PVM. "OPEC and its allies will at the very least need to put a pause on
the easing of their supply curbs in the new year. Inaction will result in
global oil stocks swelling once again."
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