Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Steadies Near Seven-Year High as OPEC+ Sticks to Output Plan

Published 10/05/2021, 09:16 AM
Updated 10/05/2021, 09:16 AM
© Reuters.

© Reuters.

(Bloomberg) -- Oil steadied in Asian trading after rallying to the highest level since 2014 following a decision by OPEC+ to maintain its planned gradual increase of supply, despite the market facing an energy crunch.

Futures in New York traded near $78 a barrel after surging 2.3% on Monday as the alliance stuck with a 400,000 barrel-a-day boost for November. Some market watchers were expecting the group, led by Saudi Arabia and Russia, to increase production by more than planned due to a spike in natural gas prices that’s led to greater demand for oil products ahead of winter.

See also: OPEC+’s Stay-the-Course Approach Alarms Febrile Oil Market

Crude markets have tightened as economies rebounded from the pandemic, and modeling from OPEC is predicting a supply deficit over the next two months. Goldman Sachs Group Inc (NYSE:GS). sees an extra 650,000 barrels a day of demand later this year as utilities wrestling with high natural gas prices switch to oil, while Saudi Aramco (SE:2222) said the gas crisis was already boosting crude consumption.

The prompt timespread for Brent was 80 cents a barrel in backwardation -- a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 74 cents a week earlier.

The OPEC+ decision “will allow us to continue normalize the market situation,” Russian Deputy Prime Minister Alexander Novak said during a speech at the meeting, part of which was broadcast by Rossiya 24 state TV channel. Ministers will meet again to discuss production policy on Nov. 4.

©2021 Bloomberg L.P.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.