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November 12, 2021
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November 12, 2021

U.S. oil retreats to one-week low as top U.S. and Russian officials discuss stabilizing current market

U.S. crude oil prices maintained their oscillating downward trend in the European session on Friday (Nov. 12). U.S. oil fell $1.19, or 1.47%, while Brent crude fell $0.95, or 1.04%, during the day.

Earlier it was reported that during the 26th United Nations Climate Change Conference (COP26), energy ministry officials from the U.S. and Russia had gotten together to start discussions on how to stabilize the current oil market. In addition, OPEC on Thursday lowered its global crude oil demand forecast also brought short-term pressure on oil prices.

It was reported that energy ministry officials from the U.S. and Russia had started discussions to pressure oil prices.
According to the latest media reports on Friday (Nov. 12), during the 26th United Nations Climate Change Conference, energy ministry officials from the United States and Russia had a discussion on how to stabilize the current oil market.

The U.S. and Russia discussed energy issues, market analysis, it is possible that the U.S. “can not do anything to support”, find the current energy major Russia to seek help.

In fact, the sudden arrival of the energy supply crisis, so many countries that rely on energy imports can not stand up to, despite the United States is a major energy exporter, but with the country’s inflation is becoming more serious, the rise in international oil prices to the United States to bring more harm than good. Therefore, the country rushed to OPEC+ (OPEC+), repeatedly asked it to produce more oil, so that the U.S. oil prices to “cool down”. But they were all refused by OPEC+.

The U.S. then expressed its disappointment with OPEC+, saying it did not expect the organization to respond in the future and that the U.S. would take corresponding measures on its own – selling its oil reserves and not ruling out calling a halt to the country’s oil exports. The Democratic Party has also written a joint letter urging President Biden to announce the release of oil reserves as soon as possible.

Although the U.S. oil production has increased, but still can not meet the demand, according to statistics, from November 5 to November 9 this year, the country’s Cushing, Oklahoma oil stocks fell by about 36,000 barrels. Currently, gasoline prices in the U.S. have risen to $8.50 per gallon (RMB 14.33 per liter), the highest level in the country in the past seven years.

The U.S. inflation index has risen more than expected, bringing big pressure to Biden, who said that the solution to the U.S. inflation problem can not be delayed, and the first thing to deal with is the problem of high energy prices. Statistics show that, as of October this year, Russia’s oil production of more than 10.8 million barrels per day, and the country is also one of the main sources of oil imports to the United States. Therefore, at this juncture, it seems logical that the United States turn to Russia.

OPEC again lowered its forecast for global oil demand in 2021, which also brought short-lived pullback pressure on oil prices.
The OPEC report released on Thursday showed that it expects global oil demand to average 96.4 million barrels per day this year, lowering its forecast by 160,000 barrels per day after lowering its fourth-quarter consumption forecast by 330,000 barrels per day from the previous month’s outlook.

In its much-anticipated Monthly Oil Market Report (MOMR), OPEC expects oil demand to grow by 5.65 million bpd in 2021 compared with 2020, compared with 5.82 million bpd in the October report.

This is the second consecutive downward revision to the outlook for oil demand growth in 2021, after the organization lowered its forecast for global oil demand growth this year to 5.8 million barrels per day in October, down from its September estimate of 5.96 million barrels per day.

OPEC said in its report on Thursday that the downward revision in today’s report was mainly due to lower-than-expected demand from China and India in the third quarter. In addition, the pace of recovery is now assumed to slow in the fourth quarter of 2011 due to higher energy prices. The organization lowered its oil demand estimate by 330,000 bpd for the current quarter and now expects global demand to be 99.49 million bpd in the fourth quarter of 2021, down from the previous month’s forecast of 99.82 million bpd.

However, the organization left its 2022 estimate unchanged from October, still expecting global oil demand to grow by 4.2 million barrels per day next year compared with 2021. Global average oil demand next year will exceed pre-epidemic levels, Cuttle said. Total oil demand is now estimated to reach 100.6 million barrels per day in 2022, 500,000 barrels per day higher than the 2019 level.

OPEC said global demand has exceeded supply over the past three quarters, resulting in a significant reduction in commercial oil stocks. Compared to the 015-2019 five-year average at the end of September 2021, OECD commercial oil stocks fell from a “huge supply surplus” in June 2020 to a shortfall of 163 million barrels, due to the OPEC+ group’s successful efforts to stabilize the market supported by increased crude oil production from refineries, an indicator of improving oil demand in the context of economic recovery following the initial impact of the pandemic. This is an indicator of improving oil demand against the backdrop of economic recovery after the initial impact of the pandemic.