(New York) Oil prices continued to rise on Wednesday, after the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies of the OPEC + agreement to cut their production by 2 million barrels per day.
Posted at 3:16 p.m.
The price of a barrel of Brent North Sea oil for December delivery gained 1.70%, to close at US$93.37. As for the American West Texas Intermediate (WTI), with maturity in November, it gained 1.43%, at US$87.76.
Gathered in Vienna, the members of OPEC + decided on Wednesday to reduce their production by 2 million barrels per day, which “will keep the market under pressure”, according to Edward Moya, of Oanda.
“It will probably only give 1 million less, because the group is under its quotas due to the inability of several countries to reach their objectives”, reacted John Kilduff, of Again Capital.
In August, the members of the cartel missed the target of 3.58 million barrels per day, or more than 8% of their supposed production, weighed down in particular by the shortcomings of Russia, Nigeria, Angola or Kazakhstan .
“They are trying to avoid a further slide in prices”, according to John Kilduff, for whom, despite doubts about the effective impact of this cut, “the signal is important”.
For the analyst, “it’s a vigorous maneuver, which was not necessary”, given the current level of prices and market fundamentals. Although they have fallen significantly since the spring surge, oil prices remain well above their level before the start of the COVID-19 pandemic.
“Stabilize the market”
After the announcement, Saudi Energy Minister Abdel Aziz bin Salman justified the voluntary contraction of OPEC+ production by the desire to “stabilize the market”.
This decision comes at a time when Europe is going through an unprecedented energy crisis and energy prices are playing a major role in soaring global inflation.
OPEC+ “preserves its own interests”, summarized John Kilduff, even if it means “alienating its customers”. “There are a lot of implications for the global economy, which could really have benefited from lower oil prices,” he added.
The OPEC + initiative reacted to the White House, which accused the cartel of “aligning with Russia”, according to spokesperson Karine Jean-Pierre.
The government of President Joe Biden has indicated that strategic US crude reserves will be drained by an additional 10 million barrels in November.
Until now, the program for the massive use of these stocks, which have shrunk by nearly 205 million barrels since September 2021, was expected to end at the end of October.
The U.S. Energy Information Agency (EIA) weekly report on Wednesday showed U.S. crude production stagnated last week at 12 million barrels per day.
It has barely changed for four months and remains far from its pre-pandemic level, i.e. 13 million barrels per day.
“The United States cannot pump strategic reserves indefinitely,” said Andy Lipow of Lipow Oil Associates. “They will eventually run out, and OPEC knows it. You have to have a plan, but the US government has not adapted” by promoting an increase in US production, according to him.
Besides OPEC+, the market was supported by the surprise drop in US commercial oil inventories, which fell 1.4 million barrels, while analysts had expected an increase of 1.8 million. , according to the EIA.
Operators notably noted the unexpected new jump in demand for gasoline (+ 7%), after an initial inflection the previous week, while the market fears that appetite for refined products will decrease with the economic slowdown. .