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Oil prices are expected to record their worst week since March, driven by additional OPEC supply entering the markets and unfavorable fuel inventory data from the United States.
What started as a relatively strong week for benchmarks turned into a decline on Wednesday after the Energy Information Administration reported another large draw in crude oil inventories with builds of both gasoline and distillates. averages, to 1 million barrels and 3.7 million barrels, respectively.
Meanwhile, Saudi Arabia and the United Arab Emirates moved closer to a compromise that would allow OPEC + to move forward with increasing oil production in response to rising oil prices. oil.
Prices faltered mid-week as early reports that the Saudis and Emiratis had struck a deal were refuted by official Emirati sources. Then they continued, as virtually all of the coverage on the topic suggested finalizing the deal and turning on the taps was only a matter of time.
Normally, adding more OPEC + barrels to the global supply should be factored into the prices and not make a big splash, but this time there is yet another wave of new Covid-19 infections in parts of the world, including Europe and the United States, and this coverage affects the sentiment of traders.
The latest Saudi-Emirati spat update, from Energy Voice, said it appeared the two had reached a deal that will see UAE oil production rise from 3.17 million bpd to 3.65 million bpd, which will allow him to increase production he would otherwise have.
The deal could pose a risk, however, according to Fitch’s head of oil and gas.
“There is a risk that this will open the door for other countries to ask for their own increases,” Joseph Gatdula told Energy Voice earlier today.
What such a development would do to oil prices is fairly easy to predict. It would be up to the leaders of the OEPC + pack to keep all of its members online to keep the prices where they are.
By Charles Kennedy for Oil chauffage
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