Oil prices deepened their losses by more than 7.5%, during trading today, Friday, as US crude fell below $ 73, with renewed investor fears of the effects of a new variable from the Corona virus.
This raised more concerns about global supply that may swell in the first quarter of next year after the release of the Strategic Petroleum Reserve by the United States and a number of major economies.
The decline in oil prices came along with other financial markets, amid fears that developments in Corona virus infections may slow economic growth and restrict movement again.
Oil Prices Today
Brent crude futures prices – for January 2022 delivery – decreased by 6.8%, recording $77.39 a barrel.
The prices of West Texas Intermediate crude futures – January delivery – also fell 7.6%, recording $ 72.45 a barrel, and there was no settlement on WTI on Thursday due to the Thanksgiving holiday.
“Oil prices fell in Asia, as it raised fears after the emergence of a new variant of the Corona virus in South Africa from imposing new closures, which caused a sell-off across Asian energy markets,” Jeffrey Haley, chief analyst, said in a note.
Strategic Oil Reserves
Also among the highlights was OPEC’s response to the announcement by the administration of US President Joe Biden that announced plans last Tuesday to release millions of barrels of oil from the Strategic Petroleum Reserve in coordination with other large consuming countries to try to calm prices.
An OPEC source said such a statement is likely to inflate supplies in the coming months, according to the findings of a panel of experts advising ministers of the Organization of the Petroleum Exporting Countries (OPEC).
A number of experts expected the market to witness a surplus of 400,000 barrels per day in December, expanding to 2.3 million barrels per day in January, and 3.7 million barrels per day in February if consuming countries go ahead with the issuance.
Expectations of a high oil surplus dominate the prospects of a meeting between OPEC and its allies, in the alliance known as “OPEC +” scheduled to be held on December 2, to decide on immediate production.
The OPEC+ alliance will decide, at its next meeting, whether to continue to increase production by 400,000 barrels per day in January.
A number of experts said it was unlikely that OPEC would change its gradual production growth trajectory if prices remained between $80 and $85 a barrel.
“We don’t think we will see $100 worth of oil if the market returns to a surplus by the first quarter,” the experts added.
However, the total volume of crude oil reserves release – estimated at 70 to 80 million barrels – was lower than market participants had expected.
“Since the volume is small, I think it is aimed at easing supply tightness, rather than significantly affecting oil markets,” Japan Petroleum Association President Tsutomu Sugimori said late Thursday.
SOURCE : REUTERS