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Oil market under strong pressure

Relevance up to 08:00 2021-11-02 UTC–4

Oil prices are rapidly declining in Monday’s trading session amid the commodity market’s expectation of the OPEC+ alliance meeting scheduled for this week.

At the time of writing, January Brent crude oil futures fell in price by 0.4% to $83.35 per barrel.

At the same time, oil quotations rose by 0.1% to $83.72 per barrel on Friday.

December WTI crude oil futures dropped by 0.7% to $83.01 per barrel on Monday. On Friday these contracts closed at $83.57 per barrel, gaining 0.9%.

WTI crude oil declined by 0.2% and Brent crude oil fell by 1.3% last week.

The price of Brent grew by 7.5%, and WTI – by 11% during October.

Experts explain the decline in the oil market on Monday by investors’ uncertainty ahead of the forthcoming OPEC+ meeting scheduled for November 4.

The OPEC+ members will meet on Thursday to discuss the need to increase oil production by more than the previously agreed upon 400,000 bpd amid domestic statistics from the United States. According to the US data, gasoline volumes in the US have shown a sharp drop and commercial reserves of oil in the Cushing oil field are rapidly approaching the minimum levels. Commodity market participants assume that this may trigger a debate among OPEC+ member countries on the need to increase production.

Meanwhile, market analysts merely agree with them, assuming that the alliance will not change its decision at the upcoming meeting. In case OPEC+ sticks to its earlier plans to increase production, the oil market will receive significant support in the short term, analysts believe.

Another downward factor for the global price of oil this week was the concerns about new outbreaks of COVID-19 in China. Thus, the number of new cases in China could significantly slow down the global oil demand recovery.

On Sunday, Beijing publicly announced that it was emptying diesel and gasoline reserves in order to increase supply in the oil market and stabilize its prices. The decision instantly triggered a rise in the price of oil in the trading session on Monday.

In addition, the day before the major media in China reported about the permanently falling level of supply of diesel fuel, which provoked large queues at gas stations in October. Experts attribute this to the fact that previously oil refining companies in China have significantly reduced fuel production amid falling margins.

The Chinese authorities decided not to disclose the volume of fuel sales.

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