Brent Oil Steadies as Investors Weigh Stockpiles, OPEC+ Policy

Sharon Cho

9:10 AM IST, 26 Oct 202111:42 AM IST, 26 Oct 20219:10 AM IST, 26 Oct 202111:42 AM IST, 26 Oct 2021

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(Bloomberg) -- Oil steadied, with investors weighing the outlook for a tighter market as U.S. stockpiles drop and OPEC+ keeps a tight rein on supply.

Brent crude was little changed after advancing 0.5% on Monday, while West Texas Intermediate was flat. Later Tuesday, the American Petroleum Institute will report estimates for U.S. oil inventories, including at the key hub in Cushing. Declines in stockpiles this year have supported higher prices.

OPEC and its allies are due to gather next week to assess output policy. Russia expects the alliance will agree to increase production by just 400,000 barrels a day at the Nov. 4 meeting, as previously agreed, Reuters reported, citing Deputy Prime Minister Alexander Novak. That follows weekend comments from Saudi Arabia’s energy minister that producers should remain cautious.

Brent Oil Steadies as Investors Weigh Stockpiles, OPEC+ Policy

Oil is set for a monthly gain in October, building on six quarterly advances, as global demand recovers from the impact of the pandemic and a broader energy crunch supports gains. At the same time, the Organization of Petroleum Exporting Countries and its allies have eased supply curbs only gradually. That’s lifted prices, cut inventories, and enabled key time spreads to balloon.

“I think there is a big-and-growing bandwagon of oil bulls who need very little to keep their conviction,” said Vandana Hari, founder of Vanda Insights.

Prices:
Brent for December settlement rose 0.1% to $86.08 a barrel on the ICE Futures Europe exchange at 6:56 a.m. in London. WTI for December delivery eased 3 cents $83.73 a barrel on the New York Mercantile Exchange. On Monday, the U.S. benchmark hit $85.41, the highest intraday price since 2014.

The crude market’s pricing structure remains deeply backwardated, a bullish pattern in which near-term prices are more costly than those further out. Brent’s prompt spread -- the difference between its nearest two contracts -- was at 80 cents a barrel, up from 72 cents a week ago.

Traders are also keeping tabs on talks that may eventually help to revive an Iranian nuclear accord, allowing a pickup in crude exports. Discussions between Tehran and the European Union are due to be held in Brussels on Wednesday, part of a drawn-out effort to clear the way for a wider diplomatic push.

Related coverage:
Pioneer Natural Resources Co. liquidated hedges on about 28,000 barrels a day of crude, a sign that it’s bullish on prices. Exxon Mobil Corp. is weighing salary increases as it tries to halt employee attrition across its business divisions. South Korea will temporarily lower a tax on fuels including gasoline and diesel by 20% to help ease the burden on consumers.