US EIA forecasts undermine White House talk
The US made subtle and not-so-subtle threats towards OPEC+ in the aim of boosting production and lowering prices but OPEC+ shrugged them off and now the US must either respond or lose face.
The market was thinking a response could come today with the release of the US EIA’s short-term energy outlook but if anything that report undermined the President’s case. The agency forecast that the crude market will be oversupplied next year.
With that, the market called Biden’s bluff. WTI crude oil is up $2.27 on the day to $84.20. That’s less than a dollar away from the October cycle high of $85.41.
In addition, the fundamentals continue to improve. The CEO of physical oil trader Vitol today said that demand is already back to 2019 levels.
“We are at or about 2019 levels now,” CEO Russell Hardy said.
He believes OPEC has 2-3 million barrels a day of spare production capacity, about what global demand will rise by next year.