Oil prices rose around 1% on Friday, staging a partial recovery after OPEC+ producers rebuffed a U.S. call to raise supply and instead maintained plans for a gradual return of output halted by the pandemic.
OPEC+ Decision on Oil Supply
The OPEC+ group of major producers agreed on Thursday to stick to their plan to raise oil output by 400,000 barrels per day (BPD) from December, ignoring calls from U.S. President Joe Biden for extra output to cool rising prices.
“This was an easy and quick OPEC+ meeting on output, no point did OPEC+ consider changing their output strategy, which was completely the message they had.” said OANDA senior market analyst Edward Moya,
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and other large producers including Russia, has been restricting supply after the coronavirus pandemic led to an evaporation of demand.
Oil prices recently touched seven-year highs but fell earlier this week on a U.S. stocks buildup and signs that high prices may encourage more supply elsewhere.
Brent is on track for a nearly 4% decline this week, the second straight week the contract has fallen. U.S. oil is heading for a decline this week of nearly 5%.
But with U.S. retail gasoline prices not far off $4 a gallon, considered a pressure point for American drivers, the onus is on the White House after Biden on Saturday urged major G20 energy producers with spare capacity to boost output.
The White House said Washington would consider a full range of tools at its disposal to guarantee access to affordable energy after OPEC+’s meeting.
“We can only guess at this point, but I’d imagine this will involve releasing the U.S. strategic reserves,” said a Singapore-based energy trader. “I don’t feel this is playing out well for the Biden administration.”