Oil prices settle up 1% on reports OPEC+ could reassess output
Oil prices rose on Monday, rebounding from recent losses, on reports that OPEC+ could adjust plans to raise oil production if large consuming countries release crude from their reserves or if the coronavirus pandemic dampens demand.
Brent crude futures rose 81 cents, or 1%, to settle at $79.70 a barrel.
WTI crude futures rose 81 cents, or 1%, to settle at $76.75 a barrel.
Prices of the Brent and U.S. West Texas Intermediate (WTI) crude benchmarks fell more than $1 in early trading, hitting their lowest levels since Oct. 1.
Japanese and Indian officials are working on ways to release national reserves of crude oil in tandem with the United States and other major economies to dampen prices, seven government sources with knowledge of the plans told Reuters.
Oil prices rose after Bloomberg News reported that OPEC+ may alter plans to keep boosting production, citing delegates. Reuters has not verified the report.
Meanwhile the prospect of the release of oil from strategic petroleum reserves (SPR) maintained the price pressure on oil and kept Brent under the psychologically important $80 mark.
The combined SPR release could be 100 million to 120 million barrels or even higher, Citi analysts said in a note dated Nov. 19. This includes 45 million to 60 million barrels from the United States, about 30 million barrels from China, 5 million barrels from India and 10 million barrels each from Japan and South Korea, the bank estimated.
Any SPR release would only affect prices for two or three weeks, said Fereidun Fesharaki, chairman of consultancy Facts Global Energy.
Citigroup analysts estimated in a note that the United States could release anywhere from 45 million to 60 million barrels from its reserves that would bring forward about 20 million in already approved sales. The bank said a combined release could be at "on the order of 100-120 million bbls or higher."
"An SPR release should now be somewhat priced in, although a larger-than-expected volume could well add further downside pressure to markets; on the other hand, if no SPR release takes place, disappointing market expectations, prices could rebound higher given still-low inventories for crude and products," they wrote.
Worries about demand have been fed by the prospect of national lockdowns in Europe, which has pressured prices.
Austria entered its fourth national lockdown on Monday as Europe again becomes the epicenter of the coronavirus pandemic. Germany could also impose fresh curbs, with politicians debating a lockdown for unvaccinated people.
Reference: Reuters
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