0249 GMT: Crude oil futures were higher in midmorning trade in Asia Nov. 10, on track for a fourth straight day of gains, as a US Energy Information Administration report forecast supply to exceed demand next year and eased concerns about a possible Strategic Petroleum Reserve release.
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At 10:49 am Singapore time (0249 GMT), the ICE January Brent futures contract was up 38 cents/b (0.45%) from the previous close at $85.16/b while the NYMEX December light sweet crude contract rose 14 cents/b (0.17%) at $84.29/b.
The EIA in its latest Short-Term Energy Outlook said growth in output from OPEC+ members, US shale and other non-OPEC countries will outpace slowing growth in global oil consumption in 2022. It forecast Brent prices easing from current levels to an average of $72/b for the year.
For the remainder of 2021, it expects Brent prices to remain near current levels, averaging $82/b in the fourth quarter.
The EIA trimmed the outlook for 2022 global oil demand growth by 130,000 b/d from last month to 3.35 million b/d, but raised its outlook for US oil production to 11.13 million b/d in 2021, up 110,000 b/d from last month’s outlook, and to 11.9 million b/d in 2022, up 170,000 b/d.
The report has eased concerns that the Biden administration will tap its SPR to curb what it sees as an excessive run-up in oil prices, analysts said. President Joe Biden has been vocal in calling on OPEC to raise output beyond their quota levels, and senior officials of the administration have hinted in recent days that Biden might take action in the week started Nov. 7.
“President Biden said he wants to see more supply amid high gasoline prices and has threatened to tap the strategic reserve. However, the release of a government report on the outlook for the oil market suggests that is not required,” said ANZ Research analysts Brian Martin & Daniel Hynes in a note.
Oil prices have added 4.2%-5.3% in value since a brief correction mid last week and were now on track to surpass seven-year peaks touched in late-October. Investors have been quick to buy any dip as the narrative of a tight supply market continued to dominate the sentiment.
Despite recent gains, both benchmarks were yet to reach overbought territory, according to the Relative Strength Index on the daily charts.
“WTI crude seems poised to make another run towards last month’s high of $85.41/b,” said OANDA Senior Market Analyst Edward Moya.
Media reports said that American Petroleum Institute data showed a draw in US crude oil inventories in the week ended Nov. 5. If confirmed by the EIA’s weekly inventory numbers out later Nov. 10, this would mark the second weekly drop in crude oil inventories in seven weeks.