Oil prices jumped on Saturday, with U.S. crude hitting its highest since 2014 and Brent futures climbing to a three-year high, after the OPEC+ group of producers stuck to its planned output increase instead of raising it further. On Monday, OPEC+ agreed to stick to its July pact to spice up output by 400,000 barrels per day (bpd) every month until a minimum of April 2022, phasing out 5.8 MMbpd of existing production cuts
U.S. West Texas Intermediate (WTI) oil closed up $1.31, or 1.7%, at $78.93 a barrel. During the session it surged over 2% to as high as $79.48, the foremost in nearly seven yrs. Brent crude settled up $1.30, or 1.6%, at $82.56. Earlier, Brent hit a three-yr high of $83.13. Both contracts extended gains made on Monday, once they each rose quite 2%.
"The market is realizing we are visiting be under supplied for the subsequent few months and OPEC seems to be proud of that situation," an analyst at Price Futures Group in Chicago. Oil prices have already surged over 50% this yr, adding to inflationary pressures that crude-consuming nations like the us and India are concerned will derail recovery from the COVID-19 pandemic.
Late last month, the OPEC+ Joint Technical Committee (JTC) said it expected a 1.1-MMbpd supply deficit this yr, which could transform a 1.4-MMbpd surplus next yr. Despite pressure to build up output, OPEC+ was concerned that a fourth global wave of COVID-19 infections could hit the demand recovery, a source told Reuters a bit before Monday's talks.
Rocketing global gas prices, which can incentivize some power generators to change from gas to grease, mean crude prices are likely to stay supported while there may be a short-term pullback, but are going into winter with very high fossil fuel prices," that expects Brent will find support around $80 and WTI within the mid-$70s. Investors will look to Wednesday's crude inventory data from the U.S. Energy Information Administration for further direction