Oil Price Fundamental Weekly Forecast – Optimistic Demand Outlook Offsets Increased Production Concerns

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Monday shortly before the New York opening. The catalysts behind the markets’ strength are expectations of strong demand and a belief that a key producer group will not release more oil than the global economy can handle. Meanwhile, China announced it released fuel reserves, the world’s biggest energy consumer, however, bullish traders appear to be unfazed by the news.

At 11:22 GMT, December WTI crude oil is trading $83.96, up $0.39 or +0.47% and January Brent crude oil is at $84.39, up $0.67 or +0.80%.

Strong Demand Expected as Winter Approaches

Oil prices will hold near $80 as the year ends, as tight supplies and higher gas bills encourage a switch to crude for power generation, a Reuters poll showed on Friday.

The survey of 41 analysts and economists forecast benchmark Brent crude to average $70.89 a barrel in 2021, the highest forecast for the year since April 2019.

It falls short of the $100 a barrel level mooted by some producers and forecasters and compare with an average price of $69.52 so far this year.

Prices are forecast to average $80.92 a barrel in the fourth quarter this year and $78.74 in the subsequent quarter.

OPEC+ Expected to Stick to Gradual Monthly Production Increases

OPEC and its allies are expected to stick to gradual, monthly production increases of 400,000 barrels per day (bpd), despite calls for more oil from major consumers.

Kuwait supports the plan to increase global oil supply which has been already agreed by OPEC+, the Gulf nation’s oil minister Mohammad Abdulatif al-Fares said on Monday, according to state news agency KUNA.

The plan, which provides for a monthly increase of 400,000 barrels per day, ensures adequate crude supply to balance the global market, he said.

China Taps Oil Reserve, Refiners Ramp Up Output to Stave Off Diesel Shortage

WTI and Brent crude were capped earlier in the session, but have since recovered following China’s weekend statement that it would tap its state fuel reserve while national refiners ramp up output sharply to avert a diesel shortage in the world’s second-largest oil user.

In a rare public statement on Sunday, China said it was releasing gasoline and diesel reserves to boost market supply and stabilize prices.

Drillers Add Oil and Gas Rigs for 15^th month in a Row – Baker Hughes

U.S. energy firms added oil and natural gas rigs for a 15^th month in a row in October as oil prices soared to fresh seven-year highs, prompting some drillers to return to the wellpad.

For the month, the number of active oil and gas rigs rose by 23, putting the total count up for a 15^th month in a row for the first time since August 2010 when it rose for a record 15 months.