Crude Oil Rally, OPEC Fails To Meet Quota
The U.S. gasoline and distillate stocks were drawn down more than expected, which caused oil prices to rise.
As winter approaches, oil prices are also expected to be boosted by rising natural gas prices. In the aftermath of Wednesday’s 0.3% decline in Brent crude futures, they trade around $84.4 a barrel.
West Texas Intermediate crude futures were trading above $81 a barrel at the time of writing, after falling 0.3% the previous day.
From there, it boosted bullishly to hint it is heading in the direction of regaining the main bullish trend, with the bullish flag yet to be completed, and it has broken WTI pattern’s resistance, which can boost the price upward in the coming days.
A bullish trend will be supported by the Exponential Moving Average 50 in the upcoming sessions, noting that a break below $79.40 a barrel will halt the expected rise and force the price to suffer additional losses.
With OPEC+ sticking to its existing pact for gradual production growth and a handful of member countries failing to meet their quota, supplies are expected to remain tight until the next OPEC+ summit.
The Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+, renewed their pledge to increase oil production in November by 400,000 barrels per day.
The price of oil was also supported by the U.S Energy Information Administration on Wednesday, which said that US crude oil production will decline more than previously forecast in 2021 and rebound in 2022.
In spite of OPEC’s cautious outlook, investors’ sentiment was supported by the tight spot market for crude oil and the prospects for seasonal demand increases in the near term.
OPEC lowered its 2021 world oil demand growth forecast in its latest report on Wednesday while holding on to its 2022 forecast.
Inventories of gasoline and distillate in the U.S. dropped more than expected, resulting in fresh buying.
According to API data, U.S. crude stockpiles increased by 5.2 million barrels for the week ended Oct. 8, but gasoline inventories fell by 4.6 million barrels and distillate stocks decreased by 2.7 million barrels.
Rising natural gas prices, however, may cause end-users to switch to oil as a result of rising prices.