Oil Ekes Out Minimal Gains As Traders Await U.S. Response To Inflation

Meanwhile, OPEC seen as maintaining output until at least Q1/22: File Image/Pixabay

Oil trading on Thursday swung repeatedly between gains and losses and ultimately settled modestly upward as yet more data muddied a clear view of oil inventories in the U.S. and president Joe Biden faced increasing pressure to address Americans being hit by inflation rising at a 6.2 percent year-over-year rate, the fastest rate in three decades.

West Texas Intermediate rose 25 cents to settle at $81.59 per barrel, and Brent added 23 cents to settle at $82.87 per barrel, prompting Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, to remark, "Where we are at this point is prices have risen because demand is rising and so you need a more permanent supply response."

To date, neither of the responses suggested by the White House - tapping the Strategic Petroleum Reserve or banning oil exports – have been deemed effective or desirable by critics, although Citigroup Inc. broke rank by stating that if 60 million barrels were released from the SPR it would be enough to wipe out the supply deficit the Energy Information Administration has forecast for the rest of this year.

Meanwhile, data from Wood Mackenzie on Thursday showed that inventories at Cushing, Oklahoma fell by about 36,000 barrels November 5-9: this seems to put to the test the contention from media that demand was experiencing a hiccup after it was reported on Wednesday by the EIA that inventories overall rose by 1 million barrels in the most recent week.

The build also fell more in line with American Petroleum Institute data showing U.S. crude stocks declining by 2.5 million barrels for the week to November 5.

As Haworth called for a more permanent supply response, Ihsan Abdul Jabbar, oil minister for Iraq, on Thursday said of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, who have been widely criticized for not boosting output to meet demand, "OPEC policy is not about lowering or raising prices, rather, it's about achieving stability in energy supplies.

"OPEC's objective is to prevent prices from collapsing; there is no target to reach a certain price."

Jabbar added that the cartel is expected to review its crude supply policy in the first quarter of next year but will likely leave current policy unchanged at next month's meeting.

In other news related to oil on Thursday, France, Greenland, Ireland, Sweden, Wales, and the Canadian province Quebec joined the Beyond Oil and Gas Alliance, formed by Denmark and Costa Rica in September and dedicated to halt new oil and gas drilling.

A government spokesman for the United Kingdom, which has not joined the Alliance, said, "While the UK's reliance on fossil fuels continues to fall, there will continue to be ongoing but diminishing need for oil and gas over the coming years."