Oil futures: Brent holds at $82/b as market waits on OPEC+ response to stock release

25 Nov 2021

Quantum Commodity Intelligence - Crude oil futures Thursday were slightly lower, although largely holding on to the gains made since the international coordinated stock release announcements on Tuesday, which fell far short of expectations.

Front-month January ICE Brent futures were trading at $82.14/barrel (1630 GMT), compared to Wednesday's settle of $82.25/b and around $79/b before the US SPR announcement on Tuesday.

At the same time, January NYMEX WTI was trading $78.14/b, versus Wednesday's settle of $78.39/b.

While the US has said it will tap 50 million barrels from inventories, the combined global response of sub-80 million barrels was seen as too little.

"In the grand scheme of things, this is trivial," Societe Generale said in an investor note.

Amrita Sen, head of research with Energy Aspects, said the announced releases in Asia were, 'in some cases a repackaging of existing SPR releases that were happening anyway," noting that several countries have already tapped government stockpiles this year. 

Investors are now looking to next week's OPEC+ meeting for a reaction from the producer group, amid reports that Saudi Arabia and Russia want to scale back production increases to account for the government inventory releases.

According to an OPEC advisory board, January and February could each see the surplus increase by 1.1 million barrels per day to 2.3 million and 3.7 million barrels per day, respectively, if strategic reserves are released during these two months. 

The Brent/WTI spread for January has widened to around $4/b, compared to around $2.80/b earlier in the week, as the 50 million barrels SPR release dragged on WTI. 

"WTI/Brent arb minus $5 puts for January and February 2022 expiry have been bought in size clips recently," noted London-based Eagle Commodities Brokers. 

Oil futures were also underpinned after the EIA said commercial crude and product stocks fell 7.6 million barrels last week, with crude rising just 1 million barrels, far lower than expected, and gasoline falling by 600,000 barrels versus expectations of an increase.