CommoditiesOil Prices Slide as Supply Boost, Weaker Demand Fears Weigh

Oil prices chart

Crude oil prices skidded on Monday, under pressure from expectations of higher supplies and weakening demand.

Brent crude futures fell 58 cents, or 0.7%, to $81.59 a barrel, as of 0151 GMT.

 U.S. West Texas Intermediate (WTI) crude lost 58 cents, or 0.7%, to $80.21 a barrel.

Oil Chart
U.S WTI Performance Chart

Both markets have dropped for the last three weeks, hit by a strengthening dollar and speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices.

“The White House has been debating how to tackle higher inflation, with some officials calling for the strategic reserve to be tapped, or halting U.S. exports,” ANZ analysts said in a report.

U.S. energy firms this week added oil and natural gas rigs for a third week in a row with crude prices hovering near a seven-year high, prompting some drillers to return to the well pad.

The oil and gas rig count, an early indicator of future output, rose by six to 556 in the week to Nov. 12, its highest level since April 2020, energy services firm Baker Hughes Co said on Friday.

“The greenback may hold its strength until the expectation of a more hawkish Fed is fully digested by the market, which may not be sooner than mid-2022. Before that happens, a strong dollar can be a possible headwind for higher oil prices,” said Leona Liu, an analyst at Singapore-based DailyFX.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) last week cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day (bpd) from last month’s forecast, as high energy prices hampered economic recovery from the Covid-19 pandemic.

Russia’s Rosneft, the world’s second-biggest oil company by output after Saudi Aramco, warned on Friday of a potential “super cycle” in global energy markets, raising the prospect of even higher prices as demand outstrips supply.

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