Daily Fundamental Oil Price Forecasts – Fears of a rate hike and falling global demand for OPEC oil weigh on prices

US West Texas Intermediate crude oil futures and the international benchmark Brent closed nearly 1% lower on Friday, reversing gains from the previous session on concerns over a rate hike earlier than forecast by the US Federal Reserve.

Friday, January WTI Crude Oil Futures settled at $ 79.69, down $ 0.73 or -0.91% and January Brent Crude Oil ended at $ 82.17, down $ 0.70 or -0.85%.

Crude oil prices have also come under pressure from the strengthening US dollar and speculation that the Biden administration may release oil from the US Strategic Petroleum Reserve (SPR) to drive prices down.

Friday’s price action is a reminder that traditional supply and demand fundamentals are not the only factors driving price action, but also Federal Reserve and government intervention.

Inflation, the dollar and the Federal Reserve …

The government announced last week that consumer inflation had hit a 31-year high. This prompted investors to increase bets on a rate hike earlier than expected by the Federal Reserve. This made the US dollar a more attractive asset. The greenback’s rise then helped reduce foreign demand for dollar-denominated crude oil.

Traders Prepare to be Liberated from United States Strategic Petroleum Reserve

US President Joe Biden could take action as early as this week to deal with soaring gasoline prices, Energy Secretary Jennifer Granholm said on Monday.

“He’s certainly looking at the options he has in the limited range of tools a president might have to deal with the cost of gasoline at the pump, as it’s a global market,” Granholm said. to MSNBC in an interview.

“I hope there will be an announcement this week,” she added but gave no details.

U.S. drillers add oil and gas rigs for third week in a row – Baker Hughes

U.S. energy companies this week added oil and gas rigs for the third week in a row as oil prices hit an almost seven-year high, prompting some drillers to return to the well.

The number of oil and gas rigs, an early indicator of future production, rose by six to 556 in the week to Nov. 12, its highest level since April 2020, the energy services company said on Friday. Baker Hughes Co in his closely watched report. This brings the total number of platforms to 244 platforms, or 78%, compared to the same period last year.

U.S. oil rigs rose four to 454 this week, their highest since April 2020, while gas rigs rose two to 102, their highest since September 2021

Short term outlook

OPEC last week cut its forecast for fourth-quarter global oil demand by 330,000 barrels per day (bpd) from last month’s forecast as high energy prices hampered economic recovery after the COVID-19 pandemic.

At the same time, the Biden administration is calling on OPEC + to increase production while preparing to release more SPR crude into the economy.

Prices could be put under pressure from both events, but an OPEC + slippage could generate another increase in supply. This would happen if OPEC and its allies decided to reduce its expected increase of 400,000 barrels per day of production in December and January.

For an overview of all of today’s economic events, check out our economic calendar.

This item was originally posted on FX Empire

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Felix J. Dixon