Crude prices settled higher on Friday fuelled by renewed supply concerns after OPEC+ producers rebuffed a U.S. call to accelerate output increases even as demand nears pre-pandemic levels.
Brent crude rose $2.20 to settle at $82.74 per barrel, while U.S. West Texas Intermediate crude (WTI) gained $2.46 to $81.27.
The Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, agreed on Thursday to stick to their plan to raise oil output by 400,000 barrels per day from December. U.S. President Joe Biden had called for extra output to cool rising prices.
OPEC’s decision to stay the course and the Biden administration’s lack of a substantial response has the oil rally continuing, said Bob Yawger, director of energy futures at Mizuho.
Only a coordinated effort, with China and others involved, would address the lack of barrels in the market, Yawger added.
The White House said it would consider all tools at its disposal to guarantee affordable energy, including the possibility of releasing oil from strategic petroleum reserves (SPR).
Sentiment also gained from data showing U.S. employment rising more than expected in October.
“Markets know that the release of strategic reserves can only have a temporary bearish effect on prompt prices and is not a lasting solution for an imbalance between supply and demand,” Rystad Energy head of oil markets Bjornar Tonhaugen said in a note.
Brent fell for a second straight week, slipping about two per cent, while WTI shed 2.7 per cent.
“While factors such as a very cold winter – which may drive the use of more oil for heating – could be supportive for prices, it will be tough for Brent to break above the $87 mark,” said Ann-Louise Hittle, vice president, oils research at consultancy Wood Mackenzie, noting a limited capacity for gas-to-oil switching despite the high price of the former.