White House Welcomes OPEC+ Decision to Increase Oil Output
December 3, 2021
OPEC+ said they would stick to their plan to add 400,000 BPD of oil output in January as they had agreed to each month since August. They did say they would monitor the market closely with the new Omicron strain and make immediate adjustments if necessary. Any decision by OPEC+ to do less than the 400,000 BPD they had agreed to or hold back supplies would have put them in full confrontation with Washington amid already tepid relations between the United States and OPEC’s leader Saudi Arabia.
The White House welcomed OPEC+’s decision to increase oil output but added that the US had no plans to reconsider its decision to release crude from reserves.
Energy prices were done in early trading yesterday but rallied back on good economic news and the fact that President Biden plans not to implement more COVID-19 lockdowns this winter but said cases will rise due to the new Omicron strain.
The US has now discovered 8 Omicron cases in 4 states, California, New York, Colorado, and Minnesota.
Citi stated that a post-Omicron rebound “should be very robust” starting sometime later in 2022 through to 2024.
UBS cut its March Brent crude price forecasts by $5 per barrel as several countries restrict international travel and slow the oil demand recovery. UBS analyst, Giovanni Staunovo, said he expects demand to reach record highs next year.
The global head of commodities research at Goldman Sachs, Jeff Currie, said many investors are taking risks off the market going into December after a strong year for commodities and added that those will return in the first quarter of next year. He said oil prices should “grind higher going into year-end, with real potential upside going into the first half of next year. The bank sees upside oil price risk despite the OPEC+ decision. He said OPEC’s decision “makes a lot of sense in the current environment.” He added that it takes the pressure off the US administration to cut a deal with Iran that would have provided barrels next year.