Brent ended up 1.70% at 93.37 dollars and WTI ended up 1.43% at 87.76 dollars.
Oil prices continued to rise on Wednesday, following the decision of the Organization of the Petroleum Exporting Countries (OPEC) and their allies of the OPEC + agreement to cut their production by two million barrels per day.
The price of Brent crude from the North Sea for December delivery gained 1.70%, to close at 93.37 dollars.
As for the American West Texas Intermediate (WTI), with maturity in November, it took 1.43%, to 87.76 dollars.
Gathered in Vienna, the members of OPEC + decided on Wednesday to cut their production by two million barrels per day, which “will keep the market under tension”, according to Edward Moya, of Oanda.
“It will probably only give a million less, because the group is under its quotas due to the inability of several countries to reach their objectives”, reacted John Kilduff, of Again Capital.
In August, the members of the cartel missed the target of 3.58 million barrels per day, more than 8% of their supposed production, weighed down in particular by the shortcomings of Russia, Nigeria, Angola or Kazakhstan .
“They are trying to avoid a further slide in prices”, according to John Kilduff, for whom, despite doubts regarding the effective impact of this cut, “the signal is important”.
For the analyst, “it’s an aggressive maneuver, which was not necessary”, given the current level of prices and market fundamentals. Although they have fallen significantly since the spring surge, black gold prices remain well above their level before the start of the Covid-19 pandemic.
“Stabilize the market”
After the announcement, Saudi Energy Minister Abdel Aziz bin Salman justified the voluntary contraction of OPEC+ production by the desire to “stabilize the market”.
The move comes as Europe is going through an unprecedented energy crisis and energy prices are playing a major role in soaring global inflation.
OPEC + “preserves its own interests”, summarized John Kilduff, even if it means “alienating its customers”. “There are a lot of implications for the global economy, which might really have benefited from lower oil prices,” he added.
The OPEC + initiative reacted to the White House, which accused the cartel of “aligning with Russia”, according to spokeswoman Karine Jean-Pierre.
The government of President Joe Biden has indicated that strategic US crude reserves will be drained by an additional 10 million barrels in November.
Until now, the program for the massive use of these stocks, which have shrunk by nearly 205 million barrels since September 2021, was expected to end at the end of October.
The US Energy Information Agency’s (EIA) weekly report on Wednesday showed US crude production stagnating last week at 12 million barrels per day.
It has hardly changed for four months and remains far from its pre-pandemic level, i.e. 13 million barrels per day.
“The United States cannot pump strategic reserves indefinitely,” said Andy Lipow of Lipow Oil Associates. “They will eventually run out, and OPEC knows it. You have to have a plan, but the American government has not adapted” by encouraging an increase in American production, according to him.
Besides OPEC+, the market was supported by the surprise drop in commercial oil inventories in the United States, which fell by 1.4 million barrels, while analysts expected an increase of 1.8 million. , according to the EIA.
Operators notably noted the new unexpected jump in demand for gasoline (+7%), following an initial inflection the previous week, while the market fears that appetite for refined products will diminish with the economic slowdown. .
