After voting earlier this week to keep output steady, bullish bets on crude resumed Friday amid expectations major oil producers will continue to permit surging prices to continue unabated.
In the New York Mercantile Exchange, January crude futures passed $81 a barrel while Brent Crude futures settled at near $83 a barrel on the London Intercontinental Exchange by over $2.
Furthermore, traders now have to contend with the possibility of increased Saudi Arabian production on top of rising supply concerns in the US. As a result of the pace of economic recovery and the growth in global demand, the outlook remains positive.
Just recently, the US President, Joe Biden appealed to OPEC to pump more oil. Energy Secretary, Jennifer Granholm called on oil-producing countries to increase crude supplies immediately so people won’t be hurt by high prices this winter after those pleas were rejected.
After OPEC and its allies decided to keep production, hopes that the U.S. could tap its strategic petroleum reserves to curb energy prices were quickly brushed aside, reinforcing expectations that oil supplies will remain tight.
On Thursday, OPEC and its allies, including Russia, committed to continuing with plans to gradually increase oil production by 400,000 barrels a day next month.
An administration spokesperson suggested the administration was preparing to use a range of tools to combat the surging gas prices after the unchanged decision irked the White House.
Baker Hughes Co reported the number of U.S. rigs rose by six last week to 550, further indicating tighter supply.
In the Energy Information Administration and OPEC’s monthly reports to be released next week, the supply and demand imbalance will remain in focus.