The release of oil from strategic reserves ramps up competition for control of the oil market amongst the world’s biggest producers. Strategists at ANZ Bank do not expect OPEC will stand by idly as the market enters a critical period. They expect Brent Oil to find support at the $80 level.
OPEC likely to restrict supply amid inventory releases
“The most likely scenario is that the OPEC+ alliance suspends its scheduled 400kb/d increase for January at its meeting next week. This would buffer the market from the peak of seasonal weakness in January, just as governments are adding barrels of oil from reserves.”
“It comes amid risks to demand as a pandemic wave hits Europe and the US. Restrictions on travel are already being implemented across the continent in a bid to suppress spread.”
“Such a move would be welcomed by the market, which has been increasingly pricing-in the likelihood of oil reserve releases pushing the market into surplus. This would see the market remain in deficit in Q1 2022 and likely support Brent crude prices at $80/bbl.”
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