OPEC+ Keeps A Lid On Supply Boosting Prices Of Crude Oil

Traders weighed the odds the world’s most powerful economy releasing crude from the Strategic Petroleum Reserve after President Biden refused to budge on his plea to boost supplies immediately.

On Friday, the WTI crude oil price gained 3.1% to pare a weekly loss after surging nearly 500 basis points on Monday.

Saudi Arabia’s oil giant Aramco raised its official selling price for crude as a result of tighter supplies, suggesting that demand remains strong.

Aramco increased its December price for its Arab Light crude versus Oman/Dubai crude to $2.70 a barrel late Friday, up $1.40 from this month.

In light of Aramco’s move, it appears “demand remains strong” as OPEC producers and other major oil exporters keep a lid on supply.

Energy Secretary Jennifer Granholm said the administration will consider Tuesday’s data in determining what measures to take to reduce gasoline prices.

Historically, oil is approaching a significant level that has provided a number of inflection points in the past, which is above $85 per barrel.

We will likely see bullish momentum and a potential break above this level before the commodity reaches $100 if we see significant bullish momentum.

Note that both times this level has been broken (in the last 17 years), the bullish momentum that followed has been strong and little consolidation has taken place.

After the yearly high in October, Oil prices have fallen somewhat, so we must see a confirmation of the bull flag with a fairly consistent move upward after the flag is broken.

In response to oil’s surge to a seven-year high, Biden led consumers last week in calling for the Organization of Petroleum Exporting Countries and its allies to step up their reactivation of the supply that had been shut down prior to the pandemic.

Although he pleaded, the alliance decided to stick with a modest increase of 400,000 barrels a day.

Following last year’s Covid cuts, Saudi Arabia raised its official crude prices for all buyers the day after OPEC+ ignored Biden’s call to increase output. The move is a sign that the country will resist pressure from the U.S. to pump faster

As vaccines have boosted mobility and fueled energy demand, crude prices have soared this year, fueling inflation and lifting product prices. Limited gas supplies have also increased consumption.