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Oil climbs 2% to multi-year highs as OPEC + sticks to production plan

An oil storage tank and pipeline equipment is seen during a Department of Energy visit to the Strategic Petroleum Reserve in Freeport, Texas, the United States, June 9, 2016. REUTERS / Richard Carson / File Photo

  • OPEC + will increase production by 400,000 bpd in November
  • WTI peaks in 2014, Brent at three-year high

Oct. 5 (Reuters) – Oil prices jumped 2% on Tuesday, with U.S. crude reaching its highest level since 2014 and Brent futures hitting a three-year high, after the oil producer group OPEC + stuck to its planned production increase rather than increasing it further.

On Monday, OPEC + agreed to join its July pact to increase production by 400,000 barrels per day (bpd) each month until at least April 2022, gradually phasing out 5.8 million bpd of production cuts. existing. Read more

U.S. West Texas Intermediate (WTI) oil rose $ 1.45, or 1.9%, to $ 79.07 a barrel by 12:50 p.m. EDT (1650 GMT). During the session, it climbed to $ 79.48, the highest in nearly seven years. Brent crude rose $ 1.55, or 1.9%, to $ 82.81. Earlier, it hit a three-year high of $ 83.13.

Both contracts extended gains made on Monday, when they each increased by more than 2%.

“The market realizes that we are going to be under-supplied over the next couple of months and OPEC seems to be happy with this situation,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Oil prices have already risen by more than 50% this year, adding to inflationary pressures that fear crude-consuming countries like the United States and India could derail the recovery from the COVID-19 pandemic. Read more

At the end of last month, the OPEC + Joint Technical Committee (JTC) said it expected a supply shortfall of 1.1 million bpd this year, which could turn into a surplus of 1.4 million bpd next year.

Despite pressure to increase production, OPEC + feared that a global fourth wave of COVID-19 infections could affect the recovery in demand, a source told Reuters shortly before the talks on Monday.

Purchases by speculators also pushed up oil prices, but some technical indicators suggest the market may be overbought, said Robert Yawger, director of the futures division at Mizuho Americas.

“At some point you run out of people to push it and the last long position (position) is already in the market,” Yawger said.

Investors will look to Wednesday’s crude inventory data from the US Energy Information Administration for more information.

U.S. inventories of crude oil and distillate likely fell last week, according to a preliminary Reuters poll.

Additional reporting by Shadia Nasralla in London and Aaron Sheldrick Editing by Jason Neely, David Goodman and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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