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Market News Bad news one after another, oil prices hit a seven-week low!
Bad news one after another, oil prices hit a seven-week low!
U.S. crude oil fell slightly on November 22, after hitting a seven-week low before it was due to the possible release of oil reserves by major global consumers, and the rebound in the epidemic also led to a decline in demand expectations.
2021-11-22
10911
On Monday (November 22), U.S. crude oil fell slightly after hitting a seven-week low before it was due to the possible release of oil reserves by major consumers around the world. In addition, the rebound in the epidemic has also led to a decline in demand expectations. However, the inability of OPEC+ members to increase production capacity has resulted in limited supply.
According to trade sources, the Asian spot crude oil market has peaked after hitting a nearly two-year high this week, as major global consumers may release oil reserves, dampen sentiment and suppress prices.
The administration of US President Joe Biden asked China, India, Japan and other countries to release strategic oil reserves. China said it is working hard to release its crude oil reserves, while South Korea is reviewing the US request.
Japanese Prime Minister Fumio Kishida said on Saturday that he was prepared to help cope with soaring oil prices after the United States requested the release of oil from its emergency stockpiles.
According to Japan's Asahi Shimbun, Japan is preparing to release its strategic oil reserves, and this plan is the main proposal being considered by the Japanese government.
Traders said that top consumers may coordinate the release of oil as never before, which has dampened buying interest in recent trading days, leading to a weakening of the key spot price premium for crude oil sold to Asian buyers outside of the Middle East and Russia.
"Prices have indeed fallen, so I think the threat of strategic oil reserves is more effective than actual execution," said a senior crude oil trader in Singapore.
US energy companies added oil and natural gas rigs for the fourth consecutive week this week, as crude oil prices rose to a seven-year high two weeks ago, prompting some drilling companies to return to well sites.
Energy services company Baker Hughes said in a closely watched report on Friday that the number of oil and gas rigs increased by seven in the week of November 19, reaching 563, the highest level since April 2020. Compared with the same period last year, the total number of drilling rigs has increased by 253, or 82%.
Due to the sharp increase in oil prices this year, some energy companies have stated that they plan to increase spending in 2021 and 2022 after cutting drilling and completion expenditures in 2019 and 2020.
A few days after the United States and some of the world’s largest economies discussed the possibility of releasing oil from strategic reserves to quell high energy prices, the White House once again put pressure on OPEC to maintain sufficient global supply.
White House spokesperson Jen Psaki said the government wants to "ensure that OPEC member states and OPEC as an organization can meet existing demand with sufficient supplies. This is what we have put pressure on them in the past."
The member states and allies of the Organization of Petroleum Exporting Countries have expressed that the recovery of the world economy is very fragile.
This week, Secretary-General Mohammed Barkin said that OPEC expects that the oversupply of oil will begin to form next month.
OPEC+ plans to hold a meeting on December 2. The organization has been increasing production by 400,000 barrels per day (bpd), phasing out record production cuts when the 2020 pandemic dissipates fuel demand.
The producer organization still has reduced production by about 3.8 million barrels per day and has not yet returned to the market. Due to years of insufficient investment, some members were unable to achieve production goals. The organization again failed to reach its goal in October because several countries struggled to achieve the proposed output levels.
Goldman Sachs analysts said in a report: "Due to their own insufficient investment, half of its members cannot meet the quota. This complicates the change of quotas because such a decision requires unanimous approval."
Asian spot crude oil market peaks due to possible release of oil reserves
According to trade sources, the Asian spot crude oil market has peaked after hitting a nearly two-year high this week, as major global consumers may release oil reserves, dampen sentiment and suppress prices.
The administration of US President Joe Biden asked China, India, Japan and other countries to release strategic oil reserves. China said it is working hard to release its crude oil reserves, while South Korea is reviewing the US request.
Japanese Prime Minister Fumio Kishida said on Saturday that he was prepared to help cope with soaring oil prices after the United States requested the release of oil from its emergency stockpiles.
According to Japan's Asahi Shimbun, Japan is preparing to release its strategic oil reserves, and this plan is the main proposal being considered by the Japanese government.
Traders said that top consumers may coordinate the release of oil as never before, which has dampened buying interest in recent trading days, leading to a weakening of the key spot price premium for crude oil sold to Asian buyers outside of the Middle East and Russia.
"Prices have indeed fallen, so I think the threat of strategic oil reserves is more effective than actual execution," said a senior crude oil trader in Singapore.
U.S. drillers add oil and gas rigs for the fourth consecutive week
US energy companies added oil and natural gas rigs for the fourth consecutive week this week, as crude oil prices rose to a seven-year high two weeks ago, prompting some drilling companies to return to well sites.
Energy services company Baker Hughes said in a closely watched report on Friday that the number of oil and gas rigs increased by seven in the week of November 19, reaching 563, the highest level since April 2020. Compared with the same period last year, the total number of drilling rigs has increased by 253, or 82%.
Due to the sharp increase in oil prices this year, some energy companies have stated that they plan to increase spending in 2021 and 2022 after cutting drilling and completion expenditures in 2019 and 2020.
The U.S. pressures OPEC+ again when weighing the release of reserves
A few days after the United States and some of the world’s largest economies discussed the possibility of releasing oil from strategic reserves to quell high energy prices, the White House once again put pressure on OPEC to maintain sufficient global supply.
White House spokesperson Jen Psaki said the government wants to "ensure that OPEC member states and OPEC as an organization can meet existing demand with sufficient supplies. This is what we have put pressure on them in the past."
The member states and allies of the Organization of Petroleum Exporting Countries have expressed that the recovery of the world economy is very fragile.
This week, Secretary-General Mohammed Barkin said that OPEC expects that the oversupply of oil will begin to form next month.
OPEC+ plans to hold a meeting on December 2. The organization has been increasing production by 400,000 barrels per day (bpd), phasing out record production cuts when the 2020 pandemic dissipates fuel demand.
The producer organization still has reduced production by about 3.8 million barrels per day and has not yet returned to the market. Due to years of insufficient investment, some members were unable to achieve production goals. The organization again failed to reach its goal in October because several countries struggled to achieve the proposed output levels.
Goldman Sachs analysts said in a report: "Due to their own insufficient investment, half of its members cannot meet the quota. This complicates the change of quotas because such a decision requires unanimous approval."
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