Oil gets boost as OPEC refuses to budge from output quotas

Despite calls from some big players to pump more crude, OPEC and allies aren’t budging just yet. Still, good news for oil prices.

Oil trading

OPEC+ sticks to its oil production guns

Sometimes a little dose of stubbornness can be a beautiful thing.

Across the past month, President Joe Biden has been calling on OPEC and allies to open their taps further, releasing a flood of crude to sweep across the world and into the fuel tanks of your average working class American.

OPEC+ isn’t budging. At last weeks November OPEC-JMMC meeting, the cartel committed to its now-familiar monthly crude production hike: an extra 400,000 bpd will be pumped in December.

In terms of prices, the WTI and Brent benchmarks made solid ground over the weekend. As of Tuesday morning, however, price action had remained pretty much flat.

At the time of writing WTI futures were trading for around $82.34.

Brent crude futures were exchanging hands at the $83.86 level.

To be honest, Saudi Arabia, Russia and the other key members of the cartel probably couldn’t care less about the plight of the average working class American. There are oil prices to protect here. It’s obvious that out of all the nations on Earth, OPEC+ members stand to gain the most from high oil prices. That’s why the taps will open as wide as the cartel wants them to open – no more, no less.

Saudi Arabia recently upgraded its crude oil pricing for Asian customers in December.

Essentially, Biden will have to look elsewhere, and should maybe look at pushing ahead with reopening and expansion of US shale and Gulf infrastructure, should he need to plug gaps in America’s crude supply.

It doesn’t appear OPEC is budging any time soon.

Infrastructure bill, jobs report puts support under oil prices

Helping support oil prices from the end of the week onwards were two key events in the US.

Firstly, the US nonfarm payrolls jobs report showed an estimate-meeting rise in the number of new roles created in October.  531,000 new positions were created in October, ahead of the 425,000 Wall Street predicted.

In terms of oil prices, more people in work means more economic activity means higher demand for gasoline and other petroleum products.

US Democrats have also passed Joe Biden’s centrepiece $1 trillion infrastructure bill into law. A nationwide construction programme, focusing on updating power supply networks, roads and highways, railways, and much more besides, will now sweep across the US.

Good news for oil prices then? That level of activity will no doubt require substantial levels of crude to pull off. Demand should be even higher.

US crude inventories show high build-up, but gasoline stocks drop

In the EIA report for the week ending 29^th October, US crude stockpiles rose 3.3m barrels. That’s roughly 1.1m barrels higher than market analysts polled by Reuters had forecast. Total crude in storage now stands at 434.1m barrels.

However, gasoline stocks dwindled. According to the report, gasoline stockpiles fell by 1.5m barrels for a total of 214.3m barrels. Levels have sunk to a four-year low.