Oil prices rose on Monday on the back of a US plan to replenish Strategic Petroleum Reserves (SPR) to take advantage of lower prices, while market scepticism over OPEC+ cuts amid expectations of a supply glut next year continues to put downward pressure on prices, Anadolu Ajansi reports.
International benchmark Brent crude was trading at $76.41 a barrel at 10.35 a.m. local time (0735 GMT), up 0.75 percent from Friday’s closing price of $75.84 a barrel in the previous trading session.
US benchmark West Texas Intermediate (WTI) was trading at the same time at $71.71 per barrel, up 0.67 percent from Friday’s closing price of $71.23 per barrel.
On Friday, the US Department of Energy (DoE) released its plan to purchase up to 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) for delivery in March 2024. The DoE plan calls for the purchase of crude oil for the reserve at a price of no more than $79 per barrel.
The country sold huge amounts of crude oil last year to counter rising petrol prices. However, prices rebounded slightly from six-month lows last week as fears of oversupply in the first quarter of next year still linger. Daniel Hynes, a commodity strategist at Australia and New Zealand Banking Group, said:
The 1.7 million barrels per day (bpd) reduction in output should provide some support to physical balances, but the market will have to be convinced before any of these cuts are priced in.
The lack of details opens up the prospect that producers could shirk their commitments, Hynes added in an emailed note.
The OPEC+ group endorsed its previous decisions to cut production at its last meeting in December. Group members refrained from announcing collective cuts and instead proposed voluntary production cuts by individual member countries, although markets had expected deeper production cuts.
The move has exacerbated uncertainty over supply next year, as both OPEC and the International Energy Agency (IEA) warned in their latest market reports of a supply glut in the first three months of next year.
Investors are now keeping an eye on the IEA and OPEC reports, which will be released on 12 and 13 December respectively.
