OPEC+ insisted on gradually increasing production, the oil distribution once rose more than 3% and touched US$82

On Monday (October 4), U.S. oil futures rose 1.74 US dollars, an increase of 2.3%, and settled at 77.62 US dollars per barrel. It has been rising in the past six weeks, setting the highest level since 2014. Burundi oil rose 1.98 US dollars, or 2.5%, to close at 81.26 US dollars per barrel, rising to the highest level since 2018. According to the OPEC+ statement, the ministers of the member states approved a plan to increase production by 400,000 barrels per day in November. The market had previously speculated that OPEC+ might choose to increase production by a larger margin in November, but according to the representative, there was no such proposal at the meeting, and oil prices were on the rise.

At present, Saudi Arabia's oil production is close to the level before the outbreak, and oil revenue is the highest since 2018. The other member states basically abide by the plan to gradually restore idle production capacity every month. According to an unnamed US official, Washington is also satisfied with the current pace of production increase. According to the statement, OPEC+ member states will hold another production meeting on November 4. In July this year, OPEC+ agreed to increase production by 400,000 barrels per day until April 2022, and gradually cancel the existing 5.8 million barrels per day production reduction plan. OPEC+'s decision to continue to gradually increase oil production has pushed up oil prices and intensified inflationary pressures. Consumer countries are worried that inflationary pressures will derail the economic recovery from the epidemic.

John Kilduff, a partner at Again Capital LLC, said, "In view of the demand situation and the results of the OPEC meeting, the overall sentiment of the crude oil market is bullish." Goldman Sachs Energy Research Director Damien Courvalin said that oil prices have reached the highest level in seven years. Inventories are about to fall to a 10-year low, which laid the foundation for another significant rise. Affected by the conversion of energy consumption, there will be an additional 650,000 barrels of oil demand per day later this year.

Russian Deputy Prime Minister Alexander Novak said at the OPEC+ monthly meeting that the organization's decision to maintain the 400,000 barrels per day increase in production plan in November will continue to help stabilize the market. The decision to maintain output growth at this level "will be the moment of equilibrium, which will allow us to continue to normalize the market." OPEC+’s compliance rate with respect to the production restriction agreement reached 119% in August, the highest level since the beginning of the agreement. Demand exceeded supply in August, which led to a reduction in inventories. As of today, inventories are 130 million barrels lower than the 5-year average. This is good for the market and means that the market is already balanced.

According to data from the International Energy Agency (IEA), an energy watchdog, demand for coal and natural gas surpassed its pre-coronavirus highs, followed by oil. Three-quarters of the global energy demand is still met by fossil fuels, and non-nuclear renewable energy accounts for less than one-fifth. The increase in oil prices has also been driven by a greater increase in natural gas prices. The soaring price of natural gas has prompted people to turn to fuel oil and other crude oil products to generate electricity and meet other industrial needs.

The Director of the International Energy Agency, Birol, predicts that oil prices will fall in the next few months, bringing "good news" to the recovery of the global economy. At the same time, a White House spokesperson said that the United States will take all measures to lower gasoline prices or limit oil price increases.

(U.S. oil daily chart)