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IEA says oil market will tighten significantly if OPEC+ stalemate continues

  
Analysis, Crude

IEA remarks in its latest update on the oil market

IEA
  • Overhang in global oil stocks built up last year has already been worked off
  • Preliminary Q3 data suggests that we could see the largest crude oil stock draw in at least a decade
  • Possibility of a market share battle by producers, looming over the market
  • Oil market to remain volatile until there is clarity on OPEC+ policy
That pretty much sums up the entirety of the oil market landscape but I think the risk pointed out on producers battling for market share is one that cannot be underestimated. The UAE already kicked things off and it may not take too long before others, especially Russia, would want a larger slice of the pie.

Oil surges ahead as OPEC+ talks get abandoned

  
Analysis, Crude

WTI closes in on its 2018 highs going into European trading

WTI M1 06-07
Oil is up a little over 2% on the day as price now climbs to $76.70 levels and nears the 2018 high @ $76.88 after OPEC+ talks get abandoned yesterday as the standoff between Saudi Arabia and the UAE continues.
From a technical perspective, a break above the 2018 high will leave little in the way towards an extended push to $100.00 but that is quite some distance to cover so I wouldn’t expect said run to come within a short period.
In any case, there are still some potential bumps along the way and one of that being once OPEC+ sorts out this mess and officially announce a deal to increase output in the months ahead and also work out plans for the new year.
That could cause a bit of a hiccup and perhaps offer some excuse for profit-taking but if anything else, that is another dip worth scaling in more longs with some measuring of risk levels based on the charts of course.
For now, baby steps. We’re near the 2018 highs already and that itself could spark some room for buyers to take some money off the table amid the uncertainty and mess created by OPEC+, though the lack of a deal i.e. less supply is a good thing in the short-term.

The US is urging OPEC+ to find a compromise deal on increasing oil output

  
Analysis, Crude

Sources now cite the US administration:

  • urging OPEC and allies to find a compromise solution
Added, White House spokesperson said in a statement:
  • “We are not a party to these talks, but Administration officials have been engaged with relevant capitals to urge a compromise solution that will allow proposed production increases to move forward.”
Yes, the US admin urgings on energy independence and combatting climate change have been put on hold while they urge MOAR OPEC+ oil pumping 😉
Greg had the news up on OPEC abandoning talks on an oil output hike:
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Background if you need:
  • OPEC+ (OPEC plus Russia and other big oil producers) agreed to output cuts of almost 10 million barrels per day (bpd) last year. This is around 10% of world output. Cuts were pout in place due to the demand slump as the pandemic hit.
  • The cuts have been gradually relaxed, and are now about 5.8m bpd.
At the talks begun last week (that have now been halted):
  • Saudi Arabia and other OPEC+ members proposed to raise output in stages by about 2 million bpd from August to December (400K bbls a month)
  • The UAE rejected extending remaining cuts to the end of 2022 from the current end date of April without adjusting its current baseline production (i.e. the UAE want to increase their share of output)
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