OIL FALLS, FOCUS ON PRODUCERS

OIL PRICES slipped yesterday, as investors eyed how major producers respond to the US-led emergency oil release designed to cool the market and with Opec now expecting the release to swell inventories.

Brent crude futures fell 34 cents, or 0.4 percent, to $81.91 a barrel by 6pm. US West Texas Intermediate crude futures fell 49c, or 0.6 percent, to $77.90 a barrel, in thin trading on the US Thanksgiving holiday.

A source from the group said Opec expected the US release to swell a surplus in oil markets by 1.1 million barrels a day (bpd). Opec+ will meet on December 1-2 to set policy.

“The bold move from the oil importers has opened the door wide open for Opec+ to adjust its supply policy downwards at its next (meeting on) 2 December 2021,” Rystad Energy analyst Louise Dickson said.

Opec+ has been adding 400 000 barrels a day of supply since August, unwinding record output cuts made last year when pandemic curbs slammed demand.

Three sources told Reuters that Opec+ was not discussing pausing its oil output increases, despite the decision by the US, Japan, India and others to release emergency oil stocks.

Opec members the United Arab Emirates and Kuwait said they were fully committed to the Opec+ agreement and had no prior stance ahead of next week’s meeting.

Iraq, also an Opec member, said it backed continuing Opec+’s existing plan of raising output by 400 000 bpd a month, saying the outlook for the oil market was unclear due to turbulence in global markets.

High oil prices have added to inflationary concerns. A co-ordinated release could add around 70-80 million barrels of crude supply to markets, analysts at Goldman Sachs said.

Traders are looking out for whether China will follow through on plans to release oil from its reserves.