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Market News OPEC+ cautiously increases production, oil prices are expected to hardly break $100

OPEC+ cautiously increases production, oil prices are expected to hardly break $100

After experiencing consecutive declines, oil prices trended positively for the second day in a row on Tuesday. OPEC member states said on Monday that OPEC+ will continue to increase production cautiously, but experts pointed out that oil prices cannot exceed $100.

2021-11-16
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On Tuesday (November 16) U.S. crude oil rose slightly. After experiencing continuous declines, oil prices trended positively for the second day in a row. OPEC member states said on Monday that OPEC+ will continue to cautiously increase production, while U.S. oil production growth is facing supply chain obstacles. However, experts point out that oil prices cannot exceed $100.


OPEC member states: OPEC+ continues to cautiously increase oil production


Saudi Arabia and the United Arab Emirates hinted that OPEC+ will continue to increase oil production cautiously, without being affected by pressure from U.S. President Biden.

Biden previously stated on many occasions that oil prices have reached a seven-year high, triggering inflation, and urged OPEC+ to increase production, thereby depressing crude oil prices.

UAE Energy Minister Suhail Al Mazrouei said that the current plan to increase daily production by 400,000 barrels per month is well executed. He said: 400,000 barrels should be enough. The next meeting between OPEC and its partners is expected to be held on December 2.

Al Mazrouei attended the ADIPEC oil and gas conference on Monday and said that he expects an oversupply of oil in the first quarter of 2022 and ruled out the possibility of oil prices reaching US$100 per barrel. OPEC+ does not need to increase production.

He said: What we know, and all the experts in the world are saying, we will have a surplus, so we don’t have to panic, we need to remain calm.

Al Mazrouei added that OPEC will assess the rate of increase in production based on changes in fundamentals.

Saudi Energy Minister Abdulaziz bin Salman pointed out that the volatility of energy shortages mainly comes from the coal and natural gas markets, which are much more volatile than oil.

He said that he is not worried that the United States may sell crude oil in its strategic oil reserves to force prices to fall. This matter should be asked to the United States. His task is not to worry about what has not happened.

Experts say that oil prices cannot exceed $100


On Monday, Allianz’s chief economic adviser, Ir Allan, expressed his personal opinion at the ADIPEC Energy Industry Forum held in Abu Dhabi, saying that inflation is not temporary and that oil prices cannot reach $100.

Il Allan argued that it is impossible for oil prices to exceed $100, because this assumption ignores the critical issue of future demand.

Il Allan explained that firstly, demand will surge and supply will not be able to keep up. Secondly, the predicted energy transition itself will bring challenges because the transition fuel is not sufficient, but today’s demand is very strong, and it may not be possible in six months. Very strong, people may reduce their purchases due to price increases, and whether energy policies will become tighter.

Fed Chairman Powell has repeatedly stated that he expects high inflation to continue until next year, and admits that it is frustrating that the supply chain problems have not yet improved.

Il Allan mentioned that the Fed claims that inflation is temporary, but high inflation is not temporary. The Fed is losing credibility. They are at risk of making major policy mistakes, which will have a huge impact on the system, politics, and society.

Il Elon said that there is sufficient evidence that companies are passing costs on to customers, charging higher prices and there will be more in the future, supply disruptions last longer than anyone expected, and consumers are making purchases. Avoid future problems, which of course will put pressure on inflation, and then wages are changing... Observe the underlying behavioral factors that cause inflation and you will conclude that this will continue for some time.

He called on the Fed to speed up the pace of reducing bond purchases in December and follow the example of the Bank of England to prepare people for raising interest rates.

U.S. oil production growth is threatened by supply chain obstacles


Oilfield service company executives said that US oil producers are struggling to find enough staff, vehicles and equipment to seize the opportunity of rising global demand and oil prices hitting seven-year highs.

These problems have prevented the United States, the world's largest oil producer and consumer, from responding to rising oil prices, and may mean that it will take longer for global production to meet the demand for recovery from the new crown epidemic. This will cause oil companies to run out of inventories, which in turn will push up oil prices.

Drilling and service companies that bring new oil and gas to the market are facing shortages and delays in trucks, electronics, pumps, and skilled workers.

They said that the contingency plan so far has contained the difficult situation, but the shortage is hitting the performance of the oilfield services industry and may short-circuit US production growth early next year.
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