Oil prices were mixed on Friday after the world's major oil producers announced they would adhere to the existing production scheme to incrementally phase-out production cuts, which were agreed upon when global demand declined during the pandemic.
International benchmark Brent crude was trading at $80.36 per barrel at 0648 GMT for a 0.22% decrease after closing the previous session at $80.54 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $79.03 per barrel at the same time for a 0.27% gain after it ended the previous session at $78.81 a barrel.
The US administration had been forcing the OPEC+ group to increase production to bring down gasoline fuel prices. However, the cartel chose to maintain the existing deal of an increase of 400,000 barrels per day (bpd). According to Ann-Louise Hittle, vice president of macro oils at Wood Mackenzie, the group has doubts about the reality of the oil supply crunch.
“Wood Mackenzie is also cautious. Gas-to-oil fuel switching is not at the levels widely feared in the market of up to 2 million bpd. We estimate it is closer to 200,000-300,000 bpd and supply is adequate to meet demand,” Hittle said.
Wood Mackenzie expects Brent to fall from the recent highs of $87 to $85 per barrel, with their predictions that oil supply will be sufficient to meet demand and survive the winter.
Now all eyes are on the US administration, which had previously said it could use every tool at its disposal “to address anti-competitive practices in US and global energy markets.”
The country had bought up the option of tapping into the Strategic Petroleum Reserves (SPR). Nonetheless, experts maintain this would do little to bring prices down.
The US has the world's largest SPR of more than 600 million barrels stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico.
By Sibel Morrow