Meanwhile, Saudi Aramco lowers its key Arab Light grade to Asia customers: File Image/Pixabay
After rising over 2 percent in the previous session due to the Organization of Petroleum Exporting Countries (OPEC) deciding to maintain supply restraint, two key crude benchmarks on Tuesday incurred yet more substantial gains - and at least one analyst is confident that further "significant" rises may still lie ahead.
West Texas Intermediate advanced $1.31 to settle at $78.93 per barrel, while Brent climbed $1.30 to settle at $82.56 per barrel.
OPEC's decision to maintain slow and steady oil increases has alarmed many market players who are nervously eyeing a possibly severe northern hemisphere winter with increased demand and dwindling supplies, and on Tuesday Bjornar Tonhaugen, head of oil markets at Rystad A/S, said, "The group is well aware of the global inventory draws, maintenance work and rising demand, but chose to wait until later this year to adopt a bolder supply approach."
Phil Flynn, senior market analyst, Price Futures Group Inc.
If we get a cold winter these prices could go up dramatically
He added, "OPEC+ have to be careful not to allow prices to inflate too much, otherwise we may see an adverse reaction that could negatively impact post-pandemic economic growth."
John Kemp, commodities analyst at Reuters, analyzed the state of the oil market on Tuesday and noted that "Brent futures are currently trading at more than $82 per barrel, up from less than $38 at the end of the same month last year, one of the fastest price increases in percentage terms for three decades."
However, in examining the level of prices in different time frames, "the most conservative conclusion is that the level of real oil prices is currently average or moderately high," according to Kemp, adding that "Further significant price rises may be needed to compel consumers to reduce oil use and switch to cheaper alternatives and encourage producers to boost output."
Taking a more pragmatic approach to the situation, Phil Flynn, senior market analyst at Price Futures Group Inc., agreed that prices may well spike in the near future: "There is no room for error in the system: if we get a cold winter these prices could go up dramatically."
Meanwhile, crude prices will likely be affected in the immediate future due to a Bloomberg survey of analysts who estimated a U.S. crude stockpile rise of 700,000 barrels last week; Washington will release its weekly tally on Wednesday.
As for OPEC's de facto leader Saudi Arabia, on Tuesday its state producer Saudi Aramco lowered its key Arab Light grade to Asia customers in November by 40 cents to $1.30 per barrel above the average of Oman and Dubai crudes, the smallest premium since March, according to documents seen by Bloomberg.